What does a hard Brexit mean for Ireland?

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Immigration controls are trumping economic concerns in London, as PM Theresa May’s definitive Brexit road map came with a commitment to put greater border controls ahead of access to the Single Market.

She said that the UK will become a "fully independent, sovereign" - this has been read as a nod towards a move away from Single Market access which can only come with concessions to the EU. A number of states have signaled their intention to veto any deal which will compromise the movement of people.

Fallout

According to Open Europe - a free market think tank - every Brexit scenario results in the Irish economy taking a greater hit than Britain. Its research reports that the 'harder' the terms of the exit, the more damage that will be done to Ireland's finances.

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In a worst-case scenario, where the UK is not in a position to negotiate favourable trade terms with the EU, the impact on Ireland could be a permanent loss of 3.1% of GDP by 2030. A separate study by the think tank proposed that the largest contraction in the British economy if it left the EU and failed to negotiate favourable trade agreements would only be 0.8%.

Even the best case scenario for the Irish economy experience a permanent loss of 1.1% of Ireland's total GDP by 2030.

Anglo Irish relations

While Ireland has a unique economic, cultural and geographical relationship with the UK - we cannot negotiate special bilateral deals.

European leaders have showed little sympathy so far for the UK since the referendum. This stance is set to harden if Britain doubles-down on migration control as it negotiates its exit.

Days after the Brexit vote German Chancellor, Angela Merkel said that Ireland will not be treated any differently to other EU states and that while Ireland will have its input as an EU member it will receive no special treatment.

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"Of course I cannot anticipate the outcome of the negotiations. The 27 member states will bring their influence to bear. The Irish voice will be heard as much as every other voice," she said in July.

Borders

The future of the border between the Republic of Ireland and Northern Ireland remains unclear.

Minister for Foreign Affairs and Trade Charlie Flanagan has welcomed the British PM's outlining of the UK's exit timeline, which will see article 50 triggered by the end of March, as it provides greater clarity to all parties.

"I have spoken to all my Government colleagues and asked them to get involved in intensive engagement with their counterparts in Northern Ireland," Mr Flanagan said.

The reintroduction of a hard border on the island of Ireland cannot be ruled out as Britain prepares to leave the EU, according to Mr Flanagan.

Inpho / Presseye / William Cherry 

In an interview with Newstalk Breakfast today, Mr Flanagan said the possible re-imposition of a border between Northern Ireland and the Republic was a "matter of grave concern" to the Government.

He said he had impressed upon his EU colleagues the "unique situation" in Ireland and "the fact that we cannot go back to the old days of a heavily fortified border".

UK ministers Boris Johnson, David Davis and James Brokenshire have expressed an "understanding" of the Irish Government’s position, he added.

"I’m not discouraged by what I’m hearing…They don’t want a return to the borders of the past," he said of his discussions with British lawmakers.

Mr Flanagan nonetheless cautioned that a more visible border may still be have to be put in place by 2019.

Ms May says the UK's relationship with the Republic of Ireland will remain close after the UK leaves the EU.

Speaking recently in Northern Ireland, she said, "We had a common travel area between the UK and the Republic of Ireland many years before either country was a member of the EU.

"Nobody wants to return to the borders of the past. What we do want to do is to kind a way through this that is going to work to deliver a practical solution for everybody."

A focus on border control over economics in the negotiations could focus attention on the Irish border - during the referendum campaign 'No' voters highlighted it as a potential backdoor into the UK.

Post-Brexit Ireland

Finance Minister Michael Noonan and Public Expenditure Minister Paschal Donohoe have said that Ireland will take measures in Budget 2017 to "Brexit-proof" the Irish economy.

Speaking to Bloomberg last week Mr Noonan described Brexit as a "very serious issue."

"If it had not been for Brexit we were looking at a smooth sea ahead of us for our voyage," he continued.

Rolling News

He also said last week that next week's budget will have a "number of measures to mitigate the impact on the Irish economy."

Mary Mitchell O’Connor, the Minister for Jobs, Enterprise, and Innovation has stated that her department will give €500,000 extra to IDA Ireland to continue its efforts to attract FDI.

The 9% VAT rate to aid the tourism sector is also expected to be maintained. In the longer-term as the UK settles into life after Brexit, sterling is likely to rebound as the British economy recovers. This would increase tourism from the UK to Ireland as goods in euro become relatively cheaper.

One possible sliver-lining from the UK's exit could be the movement of firms from the UK to Ireland. Central Bank Governor Philip Lane has said that banks are already actively considering moving business from the UK to Ireland following its decision to leave the EU.

"The most important point for now is that it's way too early to tell. Institutions aren't in decision-making mode yet, they are essentially doing research," he told Bloomberg Television.

"There has to be some level of relocation depending on how the Brexit negotiations go," he added.

Joseph Conroy, Newstalk.com
Additional reporting by Catherine Healy

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