Would the exit of the UK from the EU be catastrophic for the Irish economy?

LordSutch

So David Cameron has finally promised a referendum on Europe to the people of the United Kingdom on or before 2017, with a blunt question, do we stay in/or do we want out? The caveat being "if" he is still Prime minister in 2017. But how would the UKs exit from the EU affect Irelands economy? would it be catastrophic for us here, or would we find a way to circumnavigate trade with the neighbouring country in favour of upping our trade with mainland Europe+ further afield? Does it matter either way for Ireland if the UK stays or leaves the EU?

BBC News today: "David Cameron has said the British people must "have their say" on Europe as he pledged an in/out referendum if the Conservatives win the election. The UK Prime minister said he wanted to renegotiate the UK's relationship with the EU and then give people the "simple choice" between staying in under those new terms, or leaving the EU".

LINK > http://www.bbc.co.uk/news/uk-politics-21148282

The Waltzing Consumer

LordSutch wrote: »

So David Cameron has finally promised a referendum on Europe to the people of the United Kingdom on or before 2017, with a blunt question, do we stay in/ or do we want out? The caveat being "if" he is still Prime minister in 2017. But how would the UKs exit from the EU affect Irelands economy? would it be catastrophic for us here, or would we have to find a way to circumnavigate trade with the neighbouring State/country? Does it matter either way if they stay of if they go?

BBC News today: "David Cameron has said the British people must "have their say" on Europe as he pledged an in/out referendum if the Conservatives win the election. The UK Prime minister said he wanted to renegotiate the UK's relationship with the EU and then give people the "simple choice" between staying in under those new terms, or leaving the EU".

LINK > http://www.bbc.co.uk/news/uk-politics-21148282

Well, it depends on the trade agreements right? Just because someone opts out of the EU, it does not mean they opt out of the European Economic Area or any existing trade agreement outside of the EU.

meglome

My best guess is it would be good for Ireland. We've always had our own arrangements with the UK and if they leave the EU we'll pick up more investment.
That said I think the UK public get a very slanted view of the EU and are capable of voting the country out. Even though I firmly believe leaving would be very bad for them. All these mysterious 'powers' we keep hearing about will turn out for the most part to not make much, if any, difference to the general public. Also if they leave I suspect the general public in the UK will learn the difference between the European Court of Human Rights and the EU the hard way.

oppenheimer1

meglome wrote: »

My best guess is it would be good for Ireland. We've always had our own arrangements with the UK and if they leave the EU we'll pick up more investment.
That said I think the UK public get a very slanted view of the EU and are capable of voting the country out. Even though I firmly believe leaving would be very bad for them. All these mysterious 'powers' we keep hearing about will turn out for the most part to not make much, if any, difference to the general public. Also if they leave I suspect the general public in the UK will learn the difference between the European Court of Human Rights and the EU the hard way.

It seems to be that the working time directive and the free movement of labour seem to be the biggest issues surrounding British membership of the Union. On these two issues, I cannot see them having too much effect on the common man. The working time directive protects workers rights and prevents them being exploited, I cannot see British unions endorsing its removal. The free movement of labour is a fundamental pat of the single market, even the Swiss have to abide by it - as the UK will want to remain in the EEA, there is nothing they can do about this really.

I don't know what the consequences will be for Ireland though. Most likely it will bring with both advantages and disadvantages. Ireland would be the only English speaking nation in the Union and a committed member to it - this would be likely to attract investment. The UK has generally been a powerful ally in the EU for Ireland and served as a powerful counterpoint to Franco-German dominance. There would be a risk that Irelands open nature would be swamped by a protectionist union.

Of course a British exit cannot be looked at in isolation either. Over the next few years the nature of the EU will be changing as it comes to terms with the realities that are needed to make the single currency work. A British withdrawal would have to be looked at in this context of Ireland entering into a deeper union too.

Of course there is an interesting sub plot to this, and this is the other gamble that Cameron has taken. This is of course the Scottish independence referendum. The uncertainty over EU membership now will become an even more important factor in this debate - that staying in union with the UK will no longer guarantee future membership of the European Union. And of course the break up of the UK could have profound consequences for our own Island, with a border poll being mooted up north now.

Interesting times ahead nonetheless. Whatever happens though, the world will not end, the Sun will still rise and the tides will come in and go out.

xper

oppenheimer1 wrote: »

...Ireland would be the only English speaking nation in the Union and a committed member to it - this would be likely to attract investment...

To single out this topic, there is possibly an immediate impact here. It strikes me that, as a result of this morning's speech, Ireland has already become the only fully committed, English-speaking EU member for at least the next four years.

If you are a sitting in a board room of a large multi national somewhere in the States and you need to make a decision soon on whether to choose between the final two candidates of, say, Galway and Swindon, as the location of your new x million dollar European operations centre, I'd say that Prime Minister Cameron's little announcement over there in London, England just got your attention.

astrofool

In a time of cutting public spending, increased taxes, reduction of military and loss of global power, Cameron is doing what all politicians do, and blaming foreigners for all their self inflicted woes.

antoobrien

The two items that spring immediately to mind would be the ability to reinstate trade tariffs (import & export). This has the potential to make Irish exports more expensive. It could also mean the reintroduction of duty free when travelling to/from Britain.

Besides that we already have different currencies (which aren't pegged) and there are long standing agreements (even if it is just a wink and a nod) regarding travel & migration between Ireland and the UK (a holdover from our colonial past), so it's difficult to see what impacts there will be.

hyperborean

There is only one real worry with this, the instability of currency, initialy sterling will swing wildly as the markets deal with the cord being cut and possible the euro 2....for this to be happening with our currency and that of our biggest trading partner would spell hairy times ahead.

GSF

All sorts of thigs could happen. Take corporation tax. The 12.5% rate may have to go as part of Ireland becoming more integrated into the EU. The UK rate is dropping. you could have a scenario where tax rates and labour cost in the UK in some regions are lower than in Ireland.

Too early to tell though for certain.

slimjimmc

hyperborean wrote: »

There is only one real worry with this, the instability of currency, initialy sterling will swing wildly as the markets deal with the cord being cut and possible the euro 2....for this to be happening with our currency and that of our biggest trading partner would spell hairy times ahead.

The EU bloc is Ireland's biggest trading partner.
In 2011 the UK accounted for 16% of our export market and 35% of our imports

http://www.cso.ie/en/statistics/externaltrade/maintradingpartners-2011m/

hyperborean

slimjimmc wrote: »

The EU bloc is Ireland's biggest trading partner.
In 2011 the UK accounted for 16% of our export market and 35% of our imports

http://www.cso.ie/en/statistics/externaltrade/maintradingpartners-2011m/

My point stands, Ireland biggest non euro trading partner with 16% exports and 35% of imports having a fluctuating currency spells uncertainty and this is not what we need as we drunkenly get up of the floor after the knockout we just received.


Have you anything worthwhile to contribute to the topic? The nit pick forum is thata way>

slimjimmc

Touchy eh? If you make totally inaccurate statements don't be surprised when you get pulled up on it. I agree with your point that currency fluctuations are rarely a good thing (expect perhaps for speculators) but imo the impact of a wobbly sterling may not be as destabilising than it could be if the size of our trade with the UK was actually anywhere near that of our largest trading partner.

hyperborean

slimjimmc wrote: »

Touchy eh? If you make totally inaccurate statements don't be surprised when you get pulled up on it. I agree with your point that currency fluctuations are rarely a good thing (expect perhaps for speculators) but imo the impact of a wobbly sterling may not be as destabilising than it could be if the size of our trade with the UK was actually anywhere near that of our largest trading partner.

The statement was not inaccurate, different sources for data would distinguish trading partners as countries not regions, and to take umbridge to this is only slightly humorous, having a bad day?

http://www.talktoeu.ie/?p=3051

Who we trade with?
The majority of Irish exports reach other EU markets, mainly the UK and Belgium, but also Germany, France, Spain and the Netherlands. A significant share of Irish goods has traditionally been exported to the United States, however, the EU remains the most important destination for Irish produced commodities.

United Kingdom
Percentage of exports: 16.1%
Main exports: food and beverages (€320 million worth of cheese, €115 million worth of butter, €100 million in mushrooms and around €45 million worth of seafood , 29% of sheep meat exports, 46% of pig meat, 50% of beef). Before 1956, 81% of Irish exports went to the UK.

Belgium
Percentage of exports: 15.1%
Main exports: pharmaceutical products (around 60% of exports), organic chemicals (34 %) office machines, medical equipment

Germany
Percentage of exports: 8.1%
Main exports: Pharmaceuticals, chemicals, IT products, food and beverages (an estimated €70 million worth of Irish beef, butter – 110% increase in exports to August 2010, one of the largest Guinness importers)

France
Percentage of exports: 5.3%
Main exports: sheep meat (48% of total exports) , pharmaceuticals, chemical products, food and IT products seafood (29 % of exports)

The Netherlands
Main exports: calves, office machines, medical and pharmaceutical products, metalliferous ores and metal scrap

also
http://economic-incentives.blogspot.ie/2010/02/trading-partners.html
http://www.nationsencyclopedia.com/Europe/Ireland-FOREIGN-TRADE.html


And as an aside, can you tell me why we should include all of the eurozone and not compartmentalization belgium?

On topic
Can you explain why potential sterling fluctuations will not be destabilising to the Irish economy?

slimjimmc

umbrage, lol.
I am not saying potential sterling fluctuations will not have any destabilising effect on the Irish economy, what I am saying is that imo any destabilisation due to Sterling fluctuation is unlikely to have a major impact on the Irish economy. But the fact remains the UK account for a relatively small proportion of total Irish exports, by far the vast majority our exports go to countries which are not tied to Sterling and likewise with most of our imports.

Mr.Micro

I do not think that a UK exit would affect Ireland greatly. As it is the UK has its own currency and so many opt out clauses that it is hardly a member, let alone a participant that wishes to make the Eurozone work. I am not so sure that the UK public would vote for an exit if it came to it, and if they ever get the chance of a referendum as Cameron would have to be re-elected.

serfboard

Vince Cable was on Morning Ireland this morning saying it won't happen (pulling out of the EU), because it won't happen.

David Cameron is behaving like every other national politician in Europe in putting his own country and his own party interests first. In this case, there must be some polling figures (public or private) suggesting a rise in support for UKIP and so he is playing the referendum card.

If it ever actually comes to a referendum (which I believe it won't) certain powerful vested interests will have a word in Mr. Cameron's ear and he will argue strongly in favour of remaining in.

On the topic of how it affects Ireland though, how about this perspective? How will it affect the UK vis-a-vis Ireland? Not sure of the exact figures but I believe that the UK exports more to Ireland than to many of the BRICs (or was that BRICs combined?). That's the reason they lobbed a few billion to us recently without having to - because our situation affects their industry and employment as well. Now, if we were in the EU, and they were out, how would that affect them?

The other thing with this ridiculous idea is that I presume the Brits wouldn't be pulling out of the EEA - which would mean they would be subject to a lot of EU rules without being in a position to change them.

antoobrien

serfboard wrote: »

If it ever actually comes to a referendum (which I believe it won't) certain powerful vested interests will have a word in Mr. Cameron's ear and he will argue strongly in favour of remaining in.

IIRC Cameron is pro-EU, so he won't need the word in the ear. From his POV though, the EU membership should be something that the people of the UK want, which is the reason for the referendum promise made before the last election.

djpbarry

serfboard wrote: »

David Cameron is behaving like every other national politician in Europe in putting his own country and his own party interests first.

Oh, he's most definitely not putting his country first with this stupid posturing.

serfboard wrote: »

If it ever actually comes to a referendum (which I believe it won't) certain powerful vested interests will have a word in Mr. Cameron's ear and he will argue strongly in favour of remaining in.

I don't believe for a second that Cameron wants the UK out of the EU - he's just pandering to the anti-EU back-benchers in his party.