Brexit is bad news for Ireland, reports a new ESRI study

Economy | Thu 5 Nov | Author – Business & Finance
EU flag Rock Cohen

If the UK votes to leave the EU, the resulting changed relationship between the UK and the EU could potentially have far-reaching consequences for Ireland, an ESRI report has shown.

The UK government is committed to holding a referendum on EU membership following negotiations between the UK and the EU on key issues of concern to the UK government.

ESRI researchers have explored the economic links between Ireland and the UK and looked at the possible economic consequences of Brexit for Ireland. The analysis gathered suggests that Ireland’s interests will be best served by the UK remaining within the EU.

The report was conducted across four areas – trade, foreign direct investment, energy and migration and suggests that a Brexit could reduce bilateral trade flows between Ireland and the UK by 20% or more.

The UK is significantly more important as a source of imports to Ireland than it is as a destination for Irish exports, and any barriers to trade would increase prices of UK imports to Ireland.

While it might be thought that a reduction of FDI into the UK would result in an economic boost for Ireland through additional FDI projects relocating from the UK, the analysis in this report shows that the expected additional attractiveness of Ireland to new FDI projects is likely to be small.

A UK exit from the EU opens up the possibility of restrictions on the free movement of people between Ireland and the UK for the purposes of work. As the UK remains an important destination for Irish emigrants especially at times of high unemployment, such restrictions could have implications for the Irish labour market.

A significant number of Irish born people are resident in the UK and likewise a substantial number of UK-born people are resident in the Republic of Ireland. While many of these people will have passports, which relate to their current residencies as opposed to their places of birth, many others could find themselves post-Brexit being resident in a country where their right to residency might come into question in the event of a Brexit.

Photo: Rock Cohen