The Brexit vote set in motion a process which is likely to last at least half a decade and will provide particular economic challenges for Ireland. Much of what the Government needs to do falls under the heading of damage limitation, but there is a need to achieve this as part of a long-term strategic approach which goes beyond the term of this administration and, most likely, the next one.
This will be a long game. The talks on Britain’s exit terms will take a couple of years and negotiations on new trading arrangements will stretch long beyond that. The short term problems are highlighted by the fall in the value of sterling.
But for the next few years, the overriding theme of the fall-out from Brexit will be uncertainty – about trade terms, about the free movement of people and labour and about what this will all mean for the flow of international investment on which we depend so heavily.
There is a degree of realism needed in relation to what the Government can do. In the short term it may be able to offer some supports for businesses hit by the collapse in the value of sterling.
In the longer term it can help companies to target new markets elsewhere, and try to offset other threats that Brexit might bring through tax and spending measures. It can also fight in the talks for Irish interests. But this is a negative economic shock and it will have a cost.
The Government is right, as it has announced, to consult widely and to seek the views of various sectors and interest groups. It is also correct to try to make this, in so far as is possible, an all-island issue, notwithstanding some misgivings in Belfast about an united approach. But the Government will need to come up with a strategy and make some decisions, too. Next week’s Budget will be just one small step – what we need is a long-term plan.
Clearly, negotiating priorities need to be clarified and alliances built across Europe and,where possible, with London and Belfast. Businesses are going to come under price pressure, so the Government needs to do what it can to address state-imposed costs on them and to help firms adjust and find new export markets.
Britain will target inward investment, so we need to remain as competitive as possible in terms of education, taxes and other key factors. Another aspect of competitiveness is investment; our economy is crying out for new investment – particularly in housing but also elsewhere – and the Government needs to push at EU level to get the go-ahead to accelerate what needs to be done.
It is a new economic agenda which crosses many departments and sectors.This is a challenge to our national economic interest and it requires a coherent response. Is it too much to hope that our new politics might be able to come up with one?