A hard Brexit and a hard border are bearable
Becoming semidetatched from the EU would send us back to the 1960s
Cows stand beneath a sign for the disused Customs Office along the Border. Ireland, as an exporting nation, is about chemicals and computers, not cows. Photograph: Charles McQuillan/Getty Images
There is a particular kind of Brexiteer that cannot be convinced, regardless of any evidence, that Ireland is a real country independent of and separate to the UK. At best they might admit that while we have de jure independence we are utterly dependent on and tied to the UK.
This often manifests itself in comments such as those made by Digby Jones earlier this week that 90 per cent of Irish trade goes to them. As an ex-minister for trade and director general of the CBI he should and does know better. Perhaps this mentality explains the UK’s less than stellar trade performance in recent decades.
We can never abolish geography, despite the desires of Brexiteers, and so we will always be economically and socially intertwined with our neighbour. But the reality is that, as per the most recent analyses from almost all sources, the Irish economy is running at full capacity; across the board generally the decoupling from the UK in terms of trade continues apace.
The problem for government and society is that while this decoupling has been a feature since, especially, the advent of the single market in 1992, there remain vocal and politically savvy sectors that have not so decoupled. If one were to listen to the radio or read the newspapers in recent weeks, one might conclude that the entire Irish economy depended on things that go moo.
A trope of Brexiteers is that, in the brave old WTO world of pre-1992 Frey Bentos pies, Irish beef will not get a foothold in the UK and thus the economy will crash. The reality, which bounces off a Brexiteer like a demand for specifics off the UK prime minister, is that live animal (€330 million) and meat (€2 billion) exports to the UK account for less than 2 per cent of total merchandise trade exports and less than 1 per cent of total exports, goods and services. The difficulty is that the UK accounts for 75 per cent of live animal exports and 50 per cent of meat and meat-product exports.
Political pain point
Ireland, as an exporting nation, is about chemicals and computers, not cows. The dilemma for government is that while these sectors are negligible in overall export terms they are heavily overrepresented in employment terms: 5 per cent of total employment is in direct agriculture and fishing and probably another 5 per cent in food processing and related. Add to that the strength of the farming lobby and you have a political pain point.
That said, perhaps the time has come for some hard questions to be asked. Do we really need, at this juncture, to be engaged in live-animal export at any level? Leaving aside the real welfare concerns, this is very low-value-added economic activity. When you add to that a massive dependence on a single customer, one that is seeking to make it more difficult for you to enter, this seems a business model doomed to extinction. Other sectors have much less dependence on the UK, down from historically similar levels to the beef sector.
A more troublesome issue lurks behind the figures. Almost 60 per cent of our exports to the UK – in terms of value – come from small and medium businesses. They account for more than 90 per cent of Irish copmpanies exporting to the UK. When do we hear them on the radio, or hear TDs speaking out for them?
The reality is that in a hard Brexit we will face increased barriers to exports to and to some extent through the UK. But there may be no alternative to a hard Brexit. The “swivel-eyed loons”, as John Major so memorably described them, are in the driving seat. There is no appeasing their ideological fervour. If the withdrawal agreement and the “we asked for it but we hate it” UK-wide backstop were withdrawn they would undoubtedly find something else on which to cavil.
There is in reality limited room and less time for compromise. Having essentially wasted the summer the UK has lurched towards a hard, chaotic Brexit. While the hard Brexit train has not quite left the station it is fuelled, staffed and ready to go on a signal, and, like the troop trains of August 1914, once on track it will be next to impossible to recall.
Most situations in which we do not take steps, sooner rather than later, to maintain the integrity of the single market, will result in Ireland, in effect, becoming semidetached from the EU. This would be utterly calamitous. Joining in 1972, followed in 1992 with the advent of the single market, represented epochal shifts in our economic direction.
Add to that the quite justifiable cloud that would immediately cover our foreign direct investment model (which, problematic as it might be, is a major plank of economic development) as investors wonder if we now will move to detach from the largest pool of wealthy consumers on the globe, and we would be back to the 1960s within a decade.
Courage and vision
A hard Brexit and a hard border are bearable, at a national level. What is needed is that rarest of political traits: courage and vision. We need leaders that will sell and support this as a chance for overly-exposed sectors and groups to finally decouple from the historically comfortable market of the UK and examine new business models. We need a political consensus in operation to tell the truth to Border communities, that a hardening of the Border is not by our choice. We don’t need to embrace the creative destruction of Schumpeter or the scorched earth of Patrick Minford to take this as both a crisis and an opportunity. We are citizens of Europe, citizens of the world, and need leaders that will support us in so being.
Prof Brian Lucey is director of research at Trinity Business School, Dublin.