Brexit: Ominous signs for deal

The ongoing confusion at the heart of the British government about the nature of the Brexit deal it wants to strike with the European Union is becoming ever more ominous for this country.

The full extent of the damage a hard Brexit would inevitably do to the Irish economy was revealed in a report published in yesterday's Irish Times which suggested that it could reduce our gross national produce (GDP) by as much as 7 per cent by 2030.

To put that forecast in context, a hard Brexit would amount to the same level of damage as that inflicted by the financial crisis of 2008 to 2010, the only consolation being that the pain would be spread out over a longer period. This latest study reinforces earlier forecasts by the Economic and Social Research Institute detailing the damage that would follow from a hard Brexit.

The frustrating aspect of the problem is that there is little the Irish Government can do about the British drift towards disaster, apart from planning for the worst case scenario.

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The EU chief negotiator Michel Barnier warned last week that a decision by the United Kingdom to leave the single market and customs union would make the resumption of border checks in Ireland unavoidable.

In the agreement on phase one of the Brexit talks concluded in December, the UK committed itself to preventing a hard border either through some special arrangements for Northern Ireland or by continuing alignment with EU regulations.

It is becoming increasingly obvious, however, that the British government’s commitment to avoid a hard border is incompatible with its professed determination to leave the single market and the customs union.

There is no obvious way of squaring that circle and, with just over a year to go before the end of the talks, there is an increasing likelihood of the UK crashing out of the EU without any form of deal.

Failure to find a way of dealing with the Irish Border could well be a key factor in preventing a comprehensive agreement. Even if EU negotiators ultimately back down on the issue the Irish Government might feel impelled to veto any deal that results in a hard border.

Ireland’s European Commissioner Phil Hogan issued a stark warning in Dublin recently that a hard border will be inevitable if the UK holds to its current position but he added that the crunch negotiations have just begun.

British prime minister Theresa May is expected to make a number of speeches in the coming weeks setting out her government’s approach to the Brexit negotiations.

That might provide greater clarity about what the UK is seeking but all the indications to date are that the British government is still suffering from the delusion it can have its cake and eat it.