<img alt="" src="https://secure.mass1soma.com/153281.png" style="display:none;">

Brexit – An Analysis of Ireland’s Priorities


Brexit - An Analysis Of Ireland's Priorities.jpg

Ten months after the UK public voted to leave the EU and the subsequent triggering of Article 50 on 29th March 2017, Brexit is now a reality. The UK will quit the EU by 29th March 2019 at the latest. Significant questions remain about the Brexit process and what it might mean for the UK economy. However, Ireland intends to support the UK and maintain its long established close ties with the UK following Brexit.

The Irish Government published an information booklet in March 2017 outlining the government’s main priorities and concerns ahead of Brexit Negotiations. The Four Areas identified and prioritised as major political issues are set out below and include the economy and international trade, Northern Ireland and the peace process, the maintenance of the common travel area with the UK and the future of the Irelands membership of the EU.

Minimising The Impact On Trade And Economy

The volume of trade between Ireland and the UK is significant. It estimated at over €1 billion in goods and services being exchanged between our countries on a weekly basis. The report notes that more than 80% of the goods produced by individual firms in the agri‑food sector are exported to the UK. This means that Ireland will want to maintain the close trade between the UK and EU and minimise the regulatory burden for Irish exports transiting through the UK to EU markets.

At the same time, there is likely to be a wish for Ireland to capitalise on the move of multinationals out of the UK, should this arise. Key advantages of Ireland that might be highlighted to multinationals headquartered in the UK include its attractive headline 12.5% corporate tax rate; a comprehensive tax treaty network; its status as a common law jurisdiction that is similar to the UK’s legal system; its status as the fastest growing economy in the EU; its highly skilled and educated workforce allied to stable labour costs; R&D incentives comprising the R&D tax credit regime and the 6.25% effective rate of corporation tax introduced from 2016 under the Knowledge Development Box legislation for IP income derived from patents, certain patentable rights, and computer software; its close proximity to the UK, its status as an English speaking EU Member State with close ties to the US and its business friendly government.  

Protecting The Northern Ireland Peace Process

Being the only country to share a land border with the UK, and being so economically, culturally and politically integrated,  the relationship between Ireland and Northern Ireland is unlike anywhere else in Europe. The report notes that there are 1.9 million cars crossing the border per month.  Both the UK and Irish governments have repeatedly expressed their wish to avoid a return to customs posts at the border. Ireland is keen to protect the provisions of the Good Friday agreement of 1998 and maintain EU support for the peace process to avoid changes causing damaging political, community and security implications.

Maintaining The Common Travel Area

The Common Travel Area existing between Ireland and the UK predates the UK’s and Ireland’s entries into the European Communities in 1973 and governs the free movement of persons. It is a critical avenue for trade: allowing the free movement of persons, goods and services; and consequently permitting Irish exports to avoid excessive tariffs and red tape. The report notes that Dublin to London is the busiest international flight route in Europe. Hypothetically, the exit from these respective arrangements would signal increased tariffs on cross-border trade; customs declarations; VAT impositions and inspections on goods entering the border. Considering the value of Irish goods and services exported to the UK amounted to 17% of GDP in 2014 and that the trading relationship is valued at around €60bn per year, this outcome would be severely detrimental for both nations.

Ireland will want the new EU/UK deal to maintain the Ireland/UK common travel area essentially as if the UK was still a member of the EU. 

Influencing The Future Of The European Union

Ireland has been a member of the EU for 44 years which has had an impact on our development as a nation that at the time could never have been predicted. Ireland in 1973 was still economically dependant on the UK and struggling to find its feet in the international community. The report indicates that Ireland has received over €42 billion (net) of European funds since we joined the EU. Ireland now exports all over the world and influences global events through its voice in the EU.   Ireland’s priorities as set out in the report include the desire to strengthen existing alliances in EU and build new ones, Influence the future direction of the EU, Promote better awareness of EU role, values and achievements and maintain strong UK-Ireland and UK-EU relations

The entwined destinies of Ireland and the UK signify that Ireland will be rooting for the UK to get a good deal from the EU. There are no guarantees that the EU negotiating position and the final package will incorporate these priorities. Any deal would require the unanimous agreement of all the other 26 EU member states and many will have little interest in Ireland’s unique relationship with the UK.  It is in Ireland’s best interest for the UK and the EU to continue to have a good free trade oriented new economic relationship. The negotiation process may last several years and could terminate in either an amicable agreed new free trade oriented economic relationship or a discordant termination of negotiations without any new agreement on relationships and without a special deal for Ireland/NI/UK links. In the meantime, the announcement of a snap General election to be held on on 8th June 2017 prior to the commencement of negotiations with the EU raises more uncertainty in relation to the outcome of Brexit negotiations.

Appropriate substance as an Irish trading company

Ireland Seeks Input On Its New Territorial Tax Regime
Read More
UK Proposes New Corporate Re-domiciliation Regime
Read More
Royal Dutch Shell’s Move from the Netherlands to the UK
Read More
Changes to Ireland’s Interest Expense Deduction Rules
Read More

 Blog Comments