Irish jobs already being lost to Brexit — and it’s likely to get much worse

With each passing week, Britain is shaping up to cut ever more ties with Europe. This is grim news for Ireland, writes Dan O’Brien

‘FIVE of Ireland’s 60 mushroom farms have so far gone out of business since the [Brexit] referendum, including two this week”. So reported Reuters last Friday.

The mushroom industry, which employs 3,500 people in Ireland, sells four fifths of its produce to our nearest neighbour. It is, in many ways, the Irish canary in the Brexit coalmine. With Sterling collapsing, in large part as a result of the decision to leave the EU, many mushroom producers in Ireland are facing going out of business.

This is just the beginning of the negative consequences for this country of Britain’s decision to cut many of its ties with its neighbours.

When recent Brexit developments were last analysed in this column four weeks ago, one conclusion was that the chances of a “hard Brexit” had risen since the referendum. Everything that has happened over the past month points to an even greater likelihood of a more isolated UK.

Last week the French president explicitly said that Britain must pay a price for leaving. The week before the German chancellor said that if Britain rejects the right of Europeans to live and work in Britain, then Europe will impose new barriers on British exports into Europe. Just as Angela Merkel was making that comment, her British counterpart, Theresa May, was telling her conservative party’s annual conference that she would not accept continued free movement of people from the EU.

It has always been clear to anyone who maintains even a passing interest in European affairs that the bestof-both-worlds option, which English withdrawalists had long claimed was available on departure from the EU, was never real. No country can have the economic upsides of single-market access without the sovereignty downside of playing by the collective rules. As that reality is becoming more obvious, and hard choices are having to be made, it is increasingly clear that the May administration has decided to prioritise migration control over access to the EU’s single market.

That will make the consequences of Brexit for Ireland even more damaging. Those consequences are already being felt, with the effects of Sterling, by one measure, falling to a 168-year low point last week, being the most immediate.

It takes time for currency movements to fully affect the operations of businesses. The one-fifth fall in the value of the pound vis-a-vis the euro since the referendum will go on negatively affecting the revenues, profitability and – ultimately – employment levels of companies in Ireland which sell into the British market well into next year.

If the pound falls further, the impact will be even greater and longer lasting. Unfortunately, that is more likely than not to happen. Growing uncertainty around a hard Brexit and the sheer scale of Britain’s uncompetitiveness (no large economy in the world earns less from foreigners relative to what it pays out to them, a measure that is the best indicator of an overvalued currency) is likely to see to that.

If the outlook of Irish exporters to the UK in the short to medium term is bad owing to currency movements, it is even worse when it comes to how trade barriers are likely to evolve. The harder the Brexit, the higher new trade taxes and customs barriers will be. More barriers to trade will make Irish-made goods and services more costly in Britain, something that is entirely separate from the exchange rate issue — a second whammy, if you like.

The food industry has most to fear, not only because Britain is by far it’s biggest market, but because of the threat posed to its market share from non-European food producers in the event of a hard Brexit.

Britain has a very long history of a cheap food policy going all the way back to the 1830s. That had to be abandoned in the 1970s when it joined the EU and its customs union, thereby accepting a common tariff on all products, including food, from outside the EU. The cheap food tradition is likely to reassert itself once Britain leaves, not least because it is one of the few clear and obvious benefits that being outside the single market and customs union can deliver for British consumers.

That would happen by the UK lowering or even abolishing tariffs on food imports from the rest of the world, as it would be free to do if it fully cut its ties with the customs union. Much cheaper South American beef and New Zealand dairy products will flood into the market. That would decimate Irish farming and the food industry. The tragedy of it is that no amount of preparation or planning will mitigate the impact.

But if cheaper food is a potential upside from a hard Brexit for the UK, there will be far more costs as British manufacturers and service providers selling into the EU market face new, trade-destroying barriers to trade. The implications are becoming clearer by the week.

On Friday, the global boss of Nissan, which makes half a million cars in Britain each year, the lion’s share of which are exported, went to Downing Street. He made it abundantly clear to Theresa May that if his company is to build cars in Britain in the future, he needs guaranteed compensation for the effects of any new tariffs that are imposed on vehicles shipped to the EU. Expect to hear a lot more talk of this kind from corporate executives in the weeks, months and years to come.

And then there are the money men. They are never shy about wielding their influence. Their capacity to do so in London is legendary given the importance of the City to the British capital and the wider national economy. They are in something of a panic about the consequences of Brexit and hardly a day passes without stories in the financial press about how plans are being drawn up by financial institutions to relocate into the EU.

While these interests are biding their time — the need to be seen to respect the June referendum is paramount for the moment — as the months pass, they will up their lobbying game. The ultimate objective of the game will be the scuppering of Brexit. But it is not only business interests which will become more assertive.

From Theresa May’s recent speeches, one could be forgiven for thinking that Brexit won 80pc backing last June and that everyone who voted out voted for a hard exit. That, of course, was not the case. At least some of the 52pc who voted out did not back a hard Brexit. And many of the 48pc who voted to stay are likely to become stronger in their pro-Europeanism as time passes and the prospect of a hard Brexit looms larger.

Other factors will come into play too. The announcement last week by Nicola Sturgeon, Scotland’s first minister, that she would bring forward legislation next week to hold a second independence referendum may not come to anything, but it does up the ante.

So did last Thursday’s comments by Donald Tusk, one of the EU’s numerous presidents. “The only real alternative to a hard Brexit is no Brexit” said Tusk — a pragmatic Pole, not a continental ideological integrationist or an Anglophobic Francophone.

The likelihood of a soft Brexit is being squeezed by the day as the chances of a hard Brexit rise. But so too is the possibility of Tusk’s “no Brexit”. Ireland has twice rerun European referendums as a wide coalition of interests came together to reverse earlier decisions. The pro-European coalition of interests in Britain is not nearly as wide as in Ireland, but it will come together and become more assertive. The path to Brexit will have many twists and turns. It may yet hit a brick a wall.

‘The mushroom industry is the Irish canary in the Brexit coalmine’