Cliff Taylor: Has Ireland just caught a break on Brexit?

UK’s election result may mean its EU exit will not be as hard and damaging as we feared

With a €3 billion AIB flotation on the horizon Ireland's economy could yet be impacted by the shock UK election result.

 

Have we just caught a break on Brexit? Theresa May’s idiotic “no deal is better than a bad deal” Brexit negotiating stance is surely dead in the water, alongside her political career. There is now a chance that Brexit will not be as hard and damaging as we had started to fear.

But let’s be honest, too: a remarkably twisty and uncertainty road now lies ahead in the Brexit talks. To the existing unknowns we must now add political uncertainty in London.

Ireland’s best hope now is that a weakened Conservative government decides to actually do a deal now and recognises it has no mandate for the “no deal” threat. In the mix now, too, is the DUP, which will oppose of any special status for the North. Where this leaves the Government’s strategy on the Border remains to be seen.

The UK election has changed the game, no matter what Theresa May says

This risk of a chaotic exit remains, even if it is diminished. A weak government may be unable to get a Brexit deal done and through parliament, as the clock ticks on towards the exit date of March 29th, 2019.

The EU Council president, Donald Tusk, urged Britain: “Do your best to avoid a no deal as result of no negotiations.” A “no deal”, with Britain crashing out of the union with no agreement on how to proceed, is the worst possible outcome for the UK, for Ireland, as well as just about everyone else.

The economic logic, for both sides, is to do a deal – and one which allows trade and investment to flow as freely as possible. But politics can get in the way.

The UK election has changed the game, no matter what Theresa May says about it now being business as usual.

It is always hard to say what people “voted for” in a general election, particularly as Brexit was sidelined as an issue. However, as one former UK government adviser put it, the election did show that the voters are a “bit iffy about hard Brexit”.

Good news

If this is the case, it is good news for Ireland. The harder the Brexit, the worse it will be for us. The worst-case scenario – Britain crashing out of the EU without a deal – would involve trade barriers going up on March 29th, 2019, the day Britain leaves.

It would threaten all kinds of chaos across a range of industries as regulatory agreements become void and customs checks have to be imposed.

This is why Michael O’Leary has been warning that planes might not fly between the UK and EU for a period and what is terrifying everyone in regulated industries such as pharmaceuticals and financial services.

This threat has surely diminished after the general election vote. May, or whoever takes her place, will find it much harder to walk away.

For an economically sane agreement, both sides are going to have to give

But it is when you start to try to sketch out what a softer Brexit might actually look like that you still feel like you are groping around in the dark, hitting bits of furniture whatever way you turn.

A move away from a hard Brexit might, ideally, mean Britain staying in the EU single market, or at least in the customs unions, which is the part of the single market which allows free movement in goods.

But doing this would require Britain to sign up to some version of freedom of movement and probably jurisdiction by the EU courts.

Otherwise, why would the EU give them access to free trade access? Making these concessions would be very difficult for any UK prime minister.

“Brexit means Brexit,” after all. For an economically sane agreement – and we are talking about damage limitation here – both sides are going to have to give.

Contradictions and denials

The Brexit position of the DUP – who will be relied on to support the new government – neatly sums up the contradictions and denials that lie behind the Brexit jargon. The DUP is for Brexit but wants a frictionless Irish Border.

At the same time it appears to back Britain’s exit from the customs union and certainly don’t want any “special status” for the North, as Sinn Féin suggested.

All these things simply cannot be achieved at once. Where the DUP lands its demands are important for us, with the hope in Dublin of some kind of pragmatic approach.

If the EU tries to beat up Britain because it is now weakened politically, we need to try to stand in the way

During the election, Theresa May seemed completely bereft of a damage limitation strategy, or indeed any coherent plan for the talks. Despite this, there will be times when Ireland will have to take the British side in the talks to come. We need to do what we can to try to help the talks to get over the hurdles of agreeing the British exit bill and mutual citizens’ rights.

And assuming the talks do get on to a trade deal between the EU and UK, it is clearly in our interest that Britain gets the best trade deal possible and whatever agreements are needed to phase this in.

The risk is that the EU, sniffing political blood and wanting to teach the defector a “lesson”, tries to get too much in return. We have to use what influence we have – and that will not be enormous – to argue against this.

We are on the EU side in the talks, but there is no point denying our close trade and other ties with Britain. We are torn between two trading partners.

If the EU tries to beat up Britain because it is now weakened politically, we need to try to stand in the way. This is purely about self-interest. We need to keep Britain at the table and we need the deal to be done.

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