Crash, bang, wallop: We need to plan for a no-deal Brexit

3 Sep 2018

Image: Ivan Marc/Shutterstock

Forget about the fabled stiff upper lip, it’s more like squeaky-bum time as Britain bungles Brexit, writes John Kennedy.

I had an alarming thought. This summer could have witnessed the very last hordes of British holidaymakers enjoying free-flowing passport queues as EU citizens heading off to sunnier southern European climes.

After next March, expect long non-EU passenger queues full of bad-tempered parents from Essex or Merseyside, bored toddlers and impatient business travellers wondering, what was the point of Brexit? A cheap bottle of whiskey in duty-free?

‘If the UK government continues with the nonsensical approach that the EU needs the UK as much as the UK needs the EU, and seriously considers walking away with no deal, the Irish economy will be the major innocent casualty’

Whatever about UK prime minister Theresa May’s awkward, painful-to-watch dance moves and claims that everything will be OK, the thing about history in the making is that most of us don’t realise it is happening or the part we all play in it. Neither do the politicians.

Some have said the summer in Europe in 1914 before the outbreak of war was idyllic and that in September 1939, British troops swallowed the same lie – “It will be all over by Christmas” – their parents were told in 1914. Be careful what politicians promise you – they wear poker faces and often only know what the civil servants have told them seconds before.

But change is happening at an alarming pace and the impending circus disaster that is Brexit will have devastating consequences for Irish businesses in particular.

Do we have a plan?

Much of the focus has been on the UK and whether or not there will be enough provisions and goodies in the pantry when reality dawns that trade deals aren’t in place and costly customs and excise duties come into force.

Ireland can feel emboldened by the support our neighbours in the EU have given in negotiations around a hard or soft Brexit, but most of us know that the spectre of any kind of border is not only an economic threat, but also could unravel the 20 years of progress since the Good Friday Agreement.

In our hearts, we know people care less about guns and violence when they have good, well-paying jobs. The instability posed by Brexit threatens this.

But are we preparing our businesses for what lies ahead? In recent weeks, reported how Enterprise Ireland launched a new wave of Brexit advisory clinics. According to the State agency, the area of customs and logistics is the single largest Brexit worry for almost 50pc of Irish businesses.

From a policy perspective, lacklustre, half-hearted political leadership will not cut it. A fresh dynamism and drive characterised by bold decision-making and vision is needed. The lamentable handling of the housing and health crises in the past year do not inspire.

But what about businesses themselves? We know the sheer value of the foreign direct investment (FDI) sector to the Irish economy, but SMEs and small businesses remain the biggest employers, and any threat to their ability to trade, especially with the UK, cannot be taken lightly.

AIB’s recent Brexit Sentiment Index for the second quarter found that the manufacturing, retail and tourism sectors could be the hardest hit. However, just 6pc of 500 businesses in the Republic of Ireland actually had a plan in place; in Northern Ireland, it was 5pc.

In an alarming twist, the UK government has recommended that any business conducting cross-border trade on the island of Ireland should seek advice from the Irish Government about the type of preparations they should be making for a doomsday scenario. The mind boggles.

Part of the scenario-planning by the Irish Government includes a plan to start hiring the first of 1,000 customs officials before Christmas.

“We would recommend that, if you trade across the land border, you should consider whether you will need advice from the Irish Government about preparations you need to make,” a UK policy document stated recently.

Irish exporters are already feeling the pain as the British sterling continues its downward slide on the back of fears of a no-deal Brexit.

“Perhaps the most noteworthy statement relating to the all-island economy was the suggestion that firms should look to the Irish Government for advice on preparing for cross-border trade,” commented Michael Hall, head of markets at EY in Ireland.

“The reality is that any government is unlikely to be able to provide clear advice on how to prepare for a no-deal in isolation.”

Dr Declan Jordan, director of the Spatial and Regional Economics Research Centre at University College Cork, added: “We are just seven months from Brexit, and there is little evidence that the UK government has the political will or ability to agree on a deal with the EU.

“This leaves the Irish economy in a precarious position.

“The focus in Ireland on Brexit has been on the backstop agreement to prevent a hard border. There is far more at stake, however.

“The latest research shows that, among EU partners, only Irish regions are as exposed as UK regions to a no-deal Brexit. If the UK government continues with the nonsensical approach that the EU needs the UK as much as the UK needs the EU, and seriously considers walking away with no deal, the Irish economy will be the major innocent casualty.”

What a no-deal Brexit could mean

If the UK indeed crashes out of the EU next March, the economic impact in Ireland could be devastating. The International Monetary Fund has warned of 50,000 job losses and a 4pc drop in economic output in the Republic.

Simply put, Ireland will be the worst affected country in Europe, except for Britain itself.

Sectors with strong export ties to the UK – including agri-food, manufacturing and tourism – will be particularly exposed and the effects will be felt across all regions.

From a border perspective, UK commitments to provide for a backstop to avoid border posts, as well as regulatory alignment to ensure smooth trade for businesses both sides of the border, have yet to emerge.

It is apparent to anyone watching that the wheels have come off the Brexit train and that May and her ministers have no idea what they are doing.

There is less than two months to go before the EU and UK are expected to reach some kind of agreement that will see the UK leave the EU after more than 40 years of progress. The irony that it was the UK that helped Ireland to join the EU in 1973 is lost on no one.

The EU is the greatest humanitarian and economic experiment Europe has experienced in millennia of war, and it works. For more than 500m people, it has gifted the freedom to live, travel and trade without impediment.

For some reason – possibly due to the lies they were fed or perhaps faded notions of old imperial glory – 52pc of UK citizens voted to leave the EU. Many cited EU interference and mounting bureaucracy. But any EU bureaucracy British people perceived or experienced will be nothing like what will follow as the UK goes it alone.

Many of the UK’s business elite, including Virgin founder Richard Branson, are firmly against Brexit. It has emerged that the co-founder of fashion brand Superdry, Julian Dunkerton, is donating £1m to the People’s Vote Campaign calling for a second referendum on the terms of Britain’s exit from the EU.

Do we need a ‘brexident’?

As we face the inevitable, what should Ireland be doing to stave off the effects of the worst possible outcome?

All efforts, no doubt, should be put into deals with UK policymakers to ensure smooth trade continues across the islands and the land border between the Republic and Northern Ireland.

Ireland is facing into an election year and, as I said, most people don’t realise they are part of history until the aftermath. For the incumbent Irish Government to win confidence, it needs to do better in handling the ongoing housing and health crises, and show that it has a plan for a post-Brexit future.

Not only does Ireland face the prospect of electing a new government, it also has to elect a president.

President Michael D Higgins has handled his role with dignity and aplomb, and many citizens feel affection for him and the job he has done so far. He hopes to be re-elected but instead of a shoe-in or easy victory, a hornet’s nest has been kicked with a few former Dragons’ Den reality TV stars (the Trump effect, anyone?) as well as various politicians and journalist Gemma O’Doherty all vying for the prestigious role.

That said, it has got me thinking about what role a president could play in a post-Brexit world and if the future will be all about trade. So, perhaps the role of Irish president or ‘brexident’ could be less ceremonial and better oriented towards driving more trade and exports and helping entrepreneurs. A more active, trade-focused ambassadorial role with a bigger workload to justify the plum salary? Just a thought.

It is likely that the Brexit train won’t so much rumble elegantly into the station as it will crash ignominiously into the platform. It’s hard to think otherwise.

Business owners and leaders need a plan. Policymakers need a plan.

A stiff upper lip won’t be enough for the UK, either.

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John Kennedy is a journalist who served as editor of Silicon Republic for 17 years