According to a new study carried out by Ibec, a Brexit would have a signification impact on the Irish economy.
The report by the business group suggested that the fall-out of a Brexit for Ireland would be far-reaching, as it could hurt trade between the two countries while also creating uncertainty for businesses.
Ibec said that the all-island economy – as well as the shared electricity market – would be negatively affected, while trade with Britain as a whole would be impacted.
A Brexit could also see the value of sterling fall, which would hurt Irish imports and the tourism industry here.
Ibec noted that Ireland could benefit from some foreign direct investment moving from London to Dublin – though it also suggested that Britain would also be freed from some EU rules, which could give it an advantage in attracting new businesses over time.
The Ibec report stated that Brexit would undermine the all-island economy, adding that any disruption to cross border commercial activity could have a very destabilising effect on the governance and economy of Northern Ireland.
Ibec also warned that a Brexit would result in years of uncertainty as the UK negotiates a new agreement with the EU, which could involve higher costs for business, new customs procedures and regulatory divergence emerging over time. “Trade flows between Ireland and the UK could fall by 20% in a worse case scenario,” it warned.
On sterling, Ibec predicted that after a vote to leave the European Union, the UK currency could weaken by another 10-15% which would bring it close to parity with the euro. This would leave Irish firms selling into the UK market much less competitive.
Ibec also believes that the damaging economic effect of Brexit and the risk of investment flight would likely make the UK aggressively improve their foreign direct investment offering.
Ireland shares a wholesale all-island electricity market with the UK and while the impact of a Brexit might appear benign, Ibec cautioned that it would impact on where stocks of liquid fuels are stored for security of supply reasons.
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