The Economic Implications of Brexit for Northern Ireland
Tuesday April 26th saw almost 600 people fill the Whitla Hall at Queen’s University Belfast for Northern Ireland’s largest public debate on the upcoming UK referendum on EU membership.
The event was organised by the Centre for Irish Business and Economic Performance (CIBEP) in Queen’s Management School in conjunction with the Chief Executives’ Club at Queen’s and the Nevin Economic Research Institute. The keynote speaker was Dr Edgar Morgenroth, Associate Research Professor at the Economic and Social Research Institute and Adjunct Professor at Trinity College Dublin. The panel discussion involved Angela McGowan (Chief economist at Danske Bank NI), Dr. Esmond Birnie (Chief Economist at PwC NI) and Paul McFlynn (economist at the Nevin Economic Research Institute). The event was chaired by John Campbell, BBC Northern Ireland Economics and Business Editor.
Setting the context for the event, Dr Anthony McDonnell, Director of CIBEP said: “We won’t be telling people how to vote, but we do hope that this event will enable those attending to make a more informed decision on the economic side of the argument and Dr Morgenroth’s work is one of the most advanced pieces of work on the subject.”
Dr Morgenroth pointed out a decisive vote to remain would allow the UK to play a strong part in the EU and that a decision to leave would lead to a lot of uncertainty. He noted that the likely outcome of the referendum is difficult to call but a Brexit remains quite possible.
Dr. Morgenroth reported that exiting the EU would see the UK needing to negotiate agreements with the EU across its four central freedoms, namely people, capital, goods and services.
On the issue of trade, Dr. Morgenroth noted that Northern Ireland is the most dependent part of the UK on exports to the EU and that a Brexit could significantly reduce exports and imports. It was also argued that bilateral trade flows between the UK and Ireland could reduce by more than 20%.
Turning to the issue of foreign direct investment (FDI), Dr. Morgenroth’s research indicated that a reversal of benefits may come from Brexit even with the planned reduction of Northern Ireland’s corporate tax rate to 12.5%. To some surprise in the audience, Dr. Morgenroth highlighted that with the exception of London, Northern Ireland was more successful in attracting FDI than all other UK regions. Less FDI in Northern Ireland would result in lower potential growth which would also negatively affect the Republic of Ireland’s economic growth due to less trade.
Dr. Morgenroth also detailed the interconnection between the Republic of Ireland and Northern Ireland in terms of the electricity market and noted how a Brexit is likely to be a regressive step in facilitating cooperation between both parts of the island.
In addition to his own research, Dr. Morgenroth highlighted the recent publications of independent economic reports on the impact of Brexit by the London School of Economics, National Institute of Economic and Social Research, Oxford Economics and the Open University.
Summing up Dr. Morgenroth stated:
“While a Brexit might make some people in the UK feel better, it is very likely to make everyone poorer.”
The panel discussion heard that it was difficult to clearly articulate a figure on the cost of EU membership as one needs to factor in non-financial elements in terms of free movement, security and peace. It was also noted about needing to differentiate between certainty and risk given that there are risks in both staying and going. While there were clear differences of opinion on some issues amongst the panel, there appeared to be a strong degree of consistency in that current analysis and modelling suggests a vote to exit the EU would be likely to have negative implications for Northern Ireland and the Republic of Ireland.
The panel alongside Dr Anthony McDonnell (back left) and John Campbell (back right)