Europe should start to showcase Ireland as EU poster child
A maelstrom of political convulsion is about to sweep across Britain; Scotland, Wales and Northern Ireland are rightly animated about how their economic futures are being pitched into a period of unprecedented uncertainty. Within England, its economic powerhouse — the City of London — is struggling to adjust to an all new reality that will make its place within the enormous European market questionable.
It will take a long time for countries and corporations to forget — or even forgive — the decision that Britain has taken. Many years of effort, goodwill and hard tangible cash have been invested in creating bases within the UK that could serve the entire European market. Politicians across Europe have shown flexibility to Britain as it grappled with its historic strengths of empire with the new world of collaboration and negotiated trade agreements. It is becoming patently clear that both countries and corporations will now make decisions that reflect the harsh facts that stem from Brexit.
First, it is highly unlikely that global financial institutions will allow a single physical city in Europe to evolve like London did as a powerhouse in financial services. Short of a seismic political crisis and U-turn by Britain it is probable that finance companies will opt for a dispersal strategy forthwith. That means individual strands of the financial services industry will develop their own clusters in specific cities and geographies around Europe. For example, insurance could develop in one area, asset management in another and so forth. This will generate a significant opportunity for Ireland, and not just Dublin, to be one of these centres of excellence.
Countries around Europe, too, will adjust their attitude towards the UK. That could unfold in many different ways but it seems clear now that Britain will find a cold wind when searching for support in other parts of the EU. After effectively voting with their feet to give the EU project the thumbs down it is hardly credible to expect the architects of that structure to react with great enthusiasm.
How that converts in attitudes towards Ireland will be noteworthy. Will the EU not want to show that the country within the direct sphere of Britain’s influence — that actually opts to stay true to the EU project — can thrive in the post-Brexit world? Given the actual size of the Irish economy and population it is not hard to imagine why EU countries will want to showcase Ireland as how to prosper inside the EU rather than outside it. They can do so without costing much.
A variety of EU investment projects, third-level funding, the location of EU institutions, the CAP and more are potential injections of momentum for Ireland that could derive post-Brexit and have disproportionately positive effects on Ireland. Of course, the euro-sterling exchange rate is a key fly in the ointment around this scenario. Material depreciation of the euro will challenge exporting Irish industries, as would potential tariffs and taxes. Yet long-term pricing will adjust to reflect all of that.
The big picture is that Ireland is literally an island of EU calm amid a firestorm breaking out across Britain. We will need strong domestic leadership as this challenge arises. We will need the power brokers in Europe, including Germany and France, to stand with us too. If they do, Brexit can advance fundamentally, and in a positive way, Ireland’s position in Europe as a whole.
Joe Gill is director of corporate broking with Goodbody Stockbrokers. His views are personal.
