Ireland braces itself for 'definite' downside of Brexit


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Ireland's Finance Minister Michael Noonan attends an interview with Reuters at his office in central Dublin February 11, 2014. Ireland's Finance Minister Michael Noonan attends an interview with Reuters at his office in central Dublin February 11, 2014.


Ireland is bracing itself for damaging economic and political fallout from the decision by Britain, its nearest neighbor and largest trade partner, to vote to leave the European Union.
Ireland has the EU's fastest-growing economy but also more to lose than any other member state from a 'Brexit' with far-reaching implications for its trade, economy, security of energy supplies and peace in British-ruled Northern Ireland.
Within minutes of the outcome becoming apparent, Northern Ireland's largest Irish nationalist party, Sinn Fein, said the result intensified the case for a vote on whether Northern Ireland should leave the United Kingdom.
"The downside is definite and the upside is speculative," Noonan told parliament as the United Kingdom voted on Thursday, referring to the potential upside that some companies keen to stay in the EU might move from Britain to Ireland.
Ireland's central bank had warned that a withdrawal would hurt economic growth and jobs and significantly impact the financial sector, while a government-commissioned report found it could cut trade with Britain by at least 20 percent.
Noonan said earlier this week that an estimated cumulative Brexit-related hit on the Irish economy of as much as 1.6 percent of GDP would be "containable".
Irish exporters will be the first to suffer, as the pound weakened significantly against the euro, making their euro-priced goods more expensive. Ireland will have to consider taking steps to assist firms exporting into Britain, Foreign Minister Charlie Flanagan told Reuters on Wednesday.
Farmers and food producers, major UK suppliers, are especially vulnerable. The British Irish Chamber of Commerce said business needed a comprehensive and quickly concluded trade agreement between the EU and the UK that recognized the unique relationship between Ireland and the UK.
"As the voice of businesses with significant employment in the UK and Ireland, the Chamber is concerned about any adverse impact the UK's decision could have on trade between these Islands," said John McGrane, Director General of the Chamber.
Border controls
Of most concern to Dublin is the impact on Northern Ireland, which has the only land frontier between the United Kingdom and the rest of the EU. It was marked by military checkpoints until a 1998 peace deal ended three decades of sectarian violence.
Flanagan said the reintroduction of a hard border would have to be considered in any negotiation and that the return of controls, for customs or security, could pose a difficult challenge for the peace process.
The dismantling of military border posts was a key aspect of a 1998 peace deal that ended three decades of violence between Catholic nationalists seeking a united Ireland and Protestant unionists who wanted to keep Northern Ireland British. Over 3,600 died in the conflict.
British finance minister George Osborne has said border controls would be inevitable, while former prime ministers Tony Blair and John Major, who also campaigned for a vote to remain, said a Brexit could undermine peace in the six-county province.
Pro-Brexit campaigners, including Britain's minister for Northern Ireland, described those warnings as "scaremongering" and said a Brexit would not endanger a common travel area that predates both countries' entry into the EU in 1973.
While the United Kingdom as a whole voted by 52 percent to 48 percent in favor of leaving the EU, 56 percent of those in Northern Ireland favored staying.
Northern Ireland's nationalist Deputy First Minister Martin McGuinness said ahead of the vote that Britain should immediately commit to holding a vote to unite Ireland if its citizens chose to leave the EU.
Britain's Secretary of State for Northern Ireland may call such a vote at any time, according to the 1998 agreement that brought about peace. It also specifies that the Secretary "shall" order a referendum if it appears likely that a majority of those voting would seek to form part of a united Ireland.
Nigel Dodds, a senior member of the province's largest party, the pro-British Democratic Unionist Party, told Sky News on Thursday that Sinn Fein were on very weak ground calling for a unity vote.
But Sinn Fein chairman Declan Kearney said in a statement:
"This outcome tonight dramatically changes the political landscape here in the north of Ireland and we will be intensifying our case for the calling of a border poll.
"The British government as a direct result have forfeited any mandate to represent the interests of people here in the north of Ireland in circumstances where the north is dragged out of Europe as a result of a vote to leave."

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