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Learning what Brexit means

Posted on April 2, 2018 · Posted in Derry Journal, Holywell Trust

We have learnt a lot more about the practical impacts of Brexit in the last month.  News is emerging of many European businesses changing their supply chains, sourcing goods from the rest of the European Union in place of the UK.  We can expect more of that over the next two years, which could be damaging to the Northern Ireland economy.

 

Meanwhile, investment is being lined up for Cork port, with more Irish goods likely to be transported to the European mainland through there instead of Larne.  New investment is also projected for the Rotterdam and Antwerp ports to deal with the increased goods traffic, including to and from Cork and Dublin.  And the Dutch have begun hiring additional border guards.

 

We also have a clearer idea of the potential impact on Irish consumers.  Irish households are expected to be worse off by between €892 and €1,360 per year because of higher costs, according to analysis by Ireland’s Economic and Social Research Institute.  But many cross border workers will already be worse off than that because of the devaluation of sterling after the Brexit vote, if they are paid in pounds and have mortgages in euro.

 

We have also had a more comprehensive analysis of border crossings.  Northern Ireland civil servants tell us that a quarter of a million people cross the Irish border every day.  This is a much larger figure than previous estimates.

 

The good news is that the latest announcement of the state of negotiations between the European Commission and the UK indicates that the Common Travel Area will continue, which essentially means people will continue to be able to travel freely across the border.  But it needs to be stressed that this is an indication of where negotiations have reached, not a final outcome.  Nothing is agreed until everything is agreed.  And the Common Travel Area does not resolve the challenge of goods crossing the border.

 

Most of the content on UK-Irish relationships remains unresolved.  What has been resolved is that while the UK will still leave the EU at the end of March 2019, it will continue to operate under EU single market and customs union rules until the end of December 2020.  This gives us all more time to prepare for the real Brexit.  However, leaked documents reveal that the British customs system will not be ready to deal with new customs arrangements – and we don’t know what these will be – in time for 2021.

 

Meanwhile, the news headlines have been grabbed by Nigel Farage and Jacob Rees-Mogg – who might be described as the Brexiteers in chief – throwing fish into the River Thames.  They were protesting that the UK will not regain control of its own waters in terms of determining who can fish them during the transition period to the end of 2020.

 

Any final Brexit agreement between the EU and the UK must be approved by the European Parliament.  It has just passed a resolution urging the two bodies to adopt an ongoing association agreement which would respect the integrity of the internal market and customs union, while allowing for flexibility in other aspects of the relationship.  It also proposes that any settlement respects the Good Friday Agreement in its entirety, continues the Peace funding programmes and respects all existing rights for the people of Northern Ireland.  In addition, the European Parliament insists there should be no hard border, either by there being special status for Northern Ireland, or else through Northern Ireland’s regulatory alignment with the EU.  It seems unlikely that the UK government under Theresa May would accept this resolution, given its determination to leave the single market and the customs union.

 

This month’s Holywell Trust Brexit podcast focuses on the farming and food sector.  There are two pressing issues here.  One is that farmers rely on the European Union’s Common Agricultural Policy for much of their incomes.  Northern Ireland receives almost 10% of the UK’s share of the CAP, despite having a population just 3% of the UK’s population.  Fears have been expressed by former Northern Ireland finance minister Máirtín Ó Muilleoir that in the future, the CAP budget for Northern Ireland under UK control could drop to that 3% level.

 

The other issue for the food and agriculture sector is what happens to the border.  We have in effect an all island economy in terms of food production.  As Tony Connelly’s Brexit & Ireland book explains, many items of food cross the border several times during the production process.  Down the road from Derry is the Lacpatrick Dairy Co-operative, which is a cross-border merger of production facilities at Strabane, Monaghan and Coleraine.  We consider many of these food and farming challenges in the podcast.

 

The latest Holywell Trust Brexit podcast can be heard at: