For business, this chaos spells worrying times
After two-and-a-half years of utter chaos, the Brexit situation took it to a whole new level this week, with the cancellation of the vote on the withdrawal agreement and then the long-awaited — and inevitable — challenge to Theresa May’s leadership of the Tory party.
It is extraordinary to hear a senior Tory party member coming on RTÉ radio apologising to its listeners and stating her deep level of embarrassment for what is going on in the UK.
Of course, we have also witnessed a few Tory members letting slip what they really think of us Irish. They are expressing a view that we should still be subject to Her Majesty’s realm and behave in a subservient fashion, as befitting our status in life.
The irony is that after the events of the past two and a half years, and unfortunately one suspects there is a lot more to come, nobody in the UK political system can afford to point a finger at anybody. Its political system has been shown to possess a very high level of dysfunctionality.
The class exuded by John Major in Ireland this week is a sad reminder of what is missing from the current UK political system, but of course at the time of his leadership he was fatally harangued by the euro sceptic wing of the Tory party.
No matter what happens over the coming weeks and months in relation to Brexit, the matter will not end there. The current chaos will leave a very deeply divided political system and society. It does not bode well for the future governance of Britain and this could ultimately do untold damage to it. Perhaps the EU will ultimately be better off without the UK. Ireland won’t.
Our social, cultural and economic links to the UK are still very strong. For the indigenous Irish economy, the UK is the most important export market and is a very significant source of revenue for the tourism sector. Inside or outside the EU, the UK will remain an important trading partner for Ireland.
Hence, if the UK economy is not performing well, it will obviously have negative implications for Ireland.
We also got a foretaste, this week, of what could happen sterling in the event of a hard Brexit. The financial markets correctly believe that a hard exit would not be good for the UK economy and its currency is reflecting this. There could be much worse to come.
For businesses on both sides of the border, these are worrying times. This week, the ESRI published its latest prognostications for the Irish economy in 2019, and not surprisingly it presents a pretty upbeat assessment of the Republic’s immediate prospects.
However, it also warned that a no-deal Brexit could halve Ireland’s growth next year
While economic forecasting, by its nature, is a waste of time, it is hard to argue. Sterling would likely fall sharply in value.
The immediate shock to the UK economy would be immense and negative. The impact on business and consumer confidence in Ireland could be very significant.
Eventually, the Irish economy would adjust to a new and tougher trading relationship with the UK, but the transition would be difficult.
