It has generally come to be accepted that whilst Brexit will be bad for Ireland as well as Britain, a No Deal Brexit will be disastrous for Britain, but also very bad for Ireland. Brexit will indeed, be bad for Britain, and have a negative impact on Ireland, though not as bad as has been stated, but, whilst a No Deal Brexit will be disastrous for Britain, it could mean a bonanza for Ireland.
Brexit will be bad for Britain for all the reasons that have been discussed over the last three years. Undoubtedly, because Ireland's largest single trading partner is Britain, including all the trade that occurs daily across the border inside Ireland, it will, therefore, have a negative impact on Ireland. Yet, the extent of that negative impact should not be overstated. A lot of Ireland's economy has developed in recent decades on the basis of technology, and this production, is far less dependent upon the physical movement of goods. Moreover, as part of the EU's Single Market and Customs Union of around 450 million people (after Britain leaves), and economy of around $16 trillion, compared to around just $2 trillion for the UK economy, Ireland will have much greater ease in redirecting its trade than will the UK.
And, in any case, the fact remains that even if the UK leaves the EU, Ireland, along with other EU countries will continue to sell a similar amount of their goods and services to Britain as they do now. In fact, even more so. As the UK economy grows more slowly as a result of Brexit, and as foreign companies relocate out of the UK to Europe, so as to avoid, the problems of selling into Europe from outside the Single Market, and Customs Union, all those goods and services currently produced by those companies, and sold internally in the UK - as well as being exported to the EU, from the UK - will become imports to the UK, thereby diminishing UK GDP, and increasing its trade deficit with the EU. The only difference will be that if the UK is outside the Customs Union, and operates under WTO terms, it will introduce a range of tariffs, as set out by the WTO, on those imports. Indeed, as a result of the production being located outside the UK, into the EU, the UK would almost certainly want to introduce such tariffs so as to make imports more expensive, so as to protect UK firms from the competition, and prevent the UK's trade deficit ballooning due to the rise in imports and fall in exports.
The consequence, of course, would be that as a direct result of these tariffs, the price of all those goods and services would become much more expensive for UK consumers, which means that workers in the UK would face a sharp drop in their standard of living at a time, when the relocation of production out of the country was pushing up unemployment, and thereby causing UK wages to fall. But, in fact, even with high tariffs, its unlikely to prevent the UK needing to import these EU produces goods and services. If all foreign car producers move production out of Britain, for example, and relocate to Europe, its not as though people in the UK will stop wanting to buy cars. Its just that now those cars would have to be imported from France, or Germany, or Spain, or Belgium, and would be much more expensive, due to the tariffs. The same is true with energy, food, other raw materials, and so on.
Already, that can be seen in relation to Ireland. Even the threat of Brexit has caused financial firms to send tens of billions of pounds of capital out of Britain, mostly from London, to other EU locations. Dublin has been one of the places to benefit from that, partly because many existing staff can transfer from London to Dublin, and the use of English makes such a transfer of operations easier to achieve. But, what is true in relation to the high value, very profitable financial industry, applies to other high value production and services. So, the effect of Brexit will have negative consequences for Ireland, as a declining Britain impacts on Irish trade with the UK, but, at the same time, that very decline of Britain can see a considerable movement of capital from Britain, to Ireland, creating employment and profits in Ireland that would otherwise have occurred in Britain.
But, a No Deal Brexit, can mean a Bonanza for Ireland. In the event of a No Deal Brexit, the UK's proposal has been set out in relation to the tariffs it would apply on a range of goods and services. These range from 10% to 40%, and would apply to all those goods and services that are currently imported to Britain without tariffs inside the EU Customs Union. But, at the same time, Britain has said that it will not impose any border checks on goods crossing the irish border into Northern Ireland. That seems an amazingly reckless thing to do. It means that Britain is inviting large scale legitimised smuggling into Britain, by the back door, using the Irish border as an open gateway.
The government was forced to admit that in the event of a No Deal Brexit, the channel ports would become clogged very quickly. The EU will inevitably require UK exports to be checked at its borders, which means that UK exports will quickly seize up, leading to massive backlogs at Dover. An obvious route for EU exporters wanting to avoid that will be to route their exports through Ireland, which inside the EU will have no such hold-ups. As Britain proposes to have no border controls on goods moving from Ireland into Northern Ireland, a free flow of these goods into the North could occur, and as those goods would then be inside the UK economy, they would flow, freely, and tariff free across the Irish Sea, from Northern Ireland ports into mainland Britain.
Of course, in mainland Britain, those goods that have then entered tariff free into the UK, would be considerably cheaper than their counterparts, imported via other channels, that have had 10-40% tariffs imposed upon them, providing those that have imported through Ireland with significantly higher profits. Indeed, it would make it lucrative for firms to establish production, or simply warehousing in Ireland, to be able to take advantage of such free money, provided to them by the British government.
Rather as with the UK government's claim that it would not impose any border controls in Northern Ireland, which invites EU citizen's to migrate to Britain via that back door, the promise not to impose border controls so as to check goods crossing that border also seems designed to create a large scale movement that Britain would quickly seek to shut down.
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