Brexit: Ireland’s Friend or Foe?
The results of the June 23 referendum on Britain’s membership of the European Union remains a hotly debated topic. This is an issue which continues to divide politicians, economists and business leaders with accusations of scaremongering and poor thinking commonplace.
An article in this Sunday Times Business section written by Niall Brady provided an interesting overview of some of the potential advantages and disadvantages of Brexit from the view point of various Irish sector and company types.
Indigenous Irish SME Sector
- The article referenced Coyle’s Mr Crumb in Co. Westmeath village of Finea whose staff members fluctuate from between 80 and 120 by way of example. Mr Crumb’s €10m turnover comes from Britain where its fresh breadcrumbs and stuffing are stocked by large supermarket chains. The author proposes that keeping Britain in the EU would help secure the company’s biggest export market and jobs for its staff
- Interestingly, Mr Coyle is not convinced that Brexit will be detrimental for his company and others like it. The argument is made that whilst Brexit may distance Britain from the rest of Europe, it could in fact strengthen relations between Ireland and Britain in light of amongst other things its cultural connections, provided of course that appropriate trade agreements are put in place
Financial Services Sector
- One argument which has been voiced throughout the debate and which Sunday’s article once again addressed is the opportunity Brexit could provide for Ireland to poach financial services jobs from London City. The rationale for this proposed Irish opportunity is the loss of the “passporting” rights for UK based entities should Britain exit the EU i.e. the loss of the ability of EU companies to sell their services across all member nations without have to get clearance from local regulators
- Certainly, Credit Suisse’s recent decision to move its trading floor from Canary Wharf to a new trading floor in Dublin to service its expanding portfolio of hedge fund clients in London and across Europe would add fuel to this particular fire. However, some commentators argue that should financial services companies seek to relocate out of the City of London, Paris, Luxembourg or Frankfurt will act as stiff competition
- Interestingly, according to the article, IDA Ireland is reported to be courting Standard Chartered and Royal Bank of Scotland, while the National Treasury Management Agency claims that Ireland could gain €6bn of international investment at the UK’s expense should it vote to exit the EU
Undoubtedly, should Britain vote to exit the EU, there will be implications for Ireland. Whether these will prove advantageous or disadvantageous remains to be seen. All we can do now is wait!