25 Oct 2017

Warning hard Brexit could leave Border region further behind

Filed under: Business News

How to deal with the Border issue post-Brexit looks increasingly intractable.

Foreign Minister Simon Coveney has argued we are on the cusp of agreement on maintaining the Common Travel Area, which will ensure the free movement of people north and south. But maintaining current levels of cross border cooperation and integration, and ensuring the tariff-free movement of goods and business are key issues that so far remain unresolved.

A new report published jointly by the 11 border councils in Northern Ireland and the Republic highlights the economic and trade vulnerabilities in the region in the event of a hard Brexit.

The 46-page study concludes that even without Brexit, the region already suffers problems that could be exacerbated in the event of the UK crashing out of the EU, with productivity a particular issue of concern.

The report notes that in the North, just two local authority areas – Mid Ulster and Armagh City, and Banbridge and Craigavon – have productivity levels that in most years outperform the Northern Ireland average, which itself is behind the rest of the UK. The Republic’s border region not only lags the national average and those for Dublin and the South West, but also other poorly performing regions such as the South East, the report states.

“Despite the fact that the Irish border corridor has received significant amounts of EU and other funding since the 1990s, it continues to lag behind national or regional averages in areas such as productivity and household incomes,” said the report entitled ‘Brexit and the Border Corridor on the island of Ireland: Risks, Opportunities and issues to Consider’

“Given the current levels of cross-border co-dependency across the local authority areas, a poorly managed Brexit could mean economic outcomes where the region falls further behind.”

The report estimates that there are around 87,000 businesses in the border region as a whole, 40pc of which are in the agricultural sector. The report suggests that figure could be greater, as it states that the data excludes the self-employed, where agriculture and construction are particularly strong

Cross-border trade in goods totals over €3bn, the report states. While cross-border goods trade accounts for less than 2pc of Ireland’s total exports, for firms in the border region in the Republic, its importance is central. It’s a similar picture for the UK as a whole. In 2014, 18pc of the Republic’s services exports and 14pc of goods went into the UK. But the share of exports from the Republic’s border counties to the UK in the same year was as high as 33pc – almost twice the national average, the report noted.

Northern Ireland’s exports are also highly concentrated in the at most risk market. In the same year, 58pc of Northern Ireland’s total exports went to the EU, with more than a fifth of those to countries other than the Republic.

Agri-food is one of the sectors that could be worst hit, north and south. The report notes tariffs in the sector could vary considerably. It cites a recent report from InterTradeIreland which stated that the imposition of tariffs could see cross-border trade fall in value by 9pc.

The importance of cross-border trade to small firms, the integration of the agri-food industry and other sectors and the frequency of movement of people, have been helped in recent years by what the report terms “border management”.

This includes cross-border co-operation between business bodies, third-level institutions, the health services and community and voluntary groups.

“The success of any future regime for the management of the Irish Border will be judged not only on how well it answers the political and economic dilemmas caused by Brexit, but also how far it allows the current level of co-dependencies which exist across council areas to continue unhindered,” the report added.

Article Source: http://tinyurl.com/kbwqb42

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