Ireland and the UK joined the EEC together – should they leave the EU together too?

This article was first published on BrexitCentral.

Brexit has spooked the Irish. In fact, well before the referendum took place back in June, the Irish were spooked at even the prospect of Brexit.

In early March last year I attended a Brexit Breakfast addressed by arch-Europhile Ken Clarke, and organised by the AIB Bank. Over 300 business people packed the room at the Dublin Convention Centre. I was one of few Northern Irish in attendance. I think I was the only Leave supporter (apart from the excellent Dr Gerard Lyons who was on the speaker panel).  There was a palpable sense of panic at that event. And understandably…the fact is that the Irish and British economies are joined at the hip.  The panic was less about the UK leaving the EU. It was more about the UK leaving Ireland.

After all, Ireland’s relationship with the EU, in recent years, has hardly been a bed of roses. Meanwhile the relationship with the United Kingdom has never been better.

The EU’s tendency to tell member states how to behave, grates with the Irish. Remember the Lisbon Treaty vote in 2008? Some 53% of the people of Ireland who voted (an even greater percentage than voted for Brexit) voted to reject the Lisbon Treaty. But the EU was having none of it and insisted that the referendum be held again until the result suited their agenda.

Similarly, the EU, during the bail-out negotiations, following the 2008 crash, insisted that the Irish give up their (highly advantageous) corporation tax rates. The Irish, however, held firm and still command a huge share of foreign direct investment (FDI). Similarly, the Dublin government took a dim view when the EU Commission insisted that Apple should repay, to the Irish exchequer, what the Commission deemed to be Apple’s inappropriate tax benefits. The Dublin government considered them to be highly appropriate – to continue attracting big employers like Apple.

But while FDI is important to the Irish economy, the UK is even more important. When the UK leaves the EU some two-thirds of Ireland’s foreign trade will be with English-speaking markets outside the EU. America and the UK are Ireland’s two largest export countries. Now that Ireland is a net contributor to the EU budget, some people are beginning to ask whether Ireland might be better to follow its neighbour and big trading partner out of the EU. After all, both nations joined the EEC together, perhaps they should leave the EU together too.

And, of course, such an arrangement would be ideal for Northern Ireland. Trading between Northern Ireland and the Republic happens across a land border that has no obvious customs posts despite different VAT rates and different currencies applying in both jurisdictions. But an Irish exit would almost certainly lead to a very rapid trade deal between both nations. Ireland, since it achieved independence from Britain, has always benefitted from a Common Travel Area that allows so many of its people to live and work (and even vote) in Britain and Northern Ireland. The CTA could be extended and enhanced if Ireland were to leave the EU.

In October 2016 the Irish Daily Mail published the results of an opinion poll that showed that nearly 40% of Irish people would prefer open borders and free trade with the UK over continued membership of the EU. That’s clearly not a majority of the population but it’s a sizeable percentage. Irish public opinion could move rapidly in the direction of Irish exit if the EU continues its bully-boy tactics and the people of Ireland realise that the EU increasingly represents a drain on Irish tax-payers rather than a provider of never-ending largesse.

Interestingly, while the case for leaving the EU has traditionally come from the right of Irish politics (for example, the Sunday Times columnist and free trade advocate Cormac Lucey has written a book arguing the case for Ireland leaving the Eurozone), those on the left are now adding their voices. People Before Profit Alliance, a hard-left Party active in both Northern Ireland and the Republic, has made clear its support for an Irish exit. It has also made some big gains in recent elections at the expense, mostly, of Sinn Fein.

Anthony Coughlan, the former Associate Professor of Social Policy at Trinity College Dublin, also considered to be from the intellectual left, recently published a report of a study group of Irish economists and constitutional lawyers that “sets out the reasons why “Brexit” when it happens should be accompanied by “Irexit” (Ireland Exit).”

Irexit or not, the fact that Britain will be leaving the EU has obvious consequences for Ireland. The devaluation of the £ alone makes it more difficult for Irish traders (but great for Northern Irish traders in border towns like Newry, who, ironically, were most vocal in their opposition to Brexit).  Ireland needs to consider a future that, within the EU, may not make quite as much sense given the UK’s absence.

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