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Brexit and Ireland and a pessimistic economic analysis. June 20, 2017

Posted by WorldbyStorm in Uncategorized.
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Have to admit to being somewhat entertained by the narrative emerging from the UK media in relation to the Davis/Barnier discussions yesterday. Even the Guardian tilted towards the language of ‘capitulation’ and so on in respect of the UK having to bow to reality in relation to the power relationships at work. 

British negotiators have capitulated to key European demands for a phased approach to Brexit talks, agreeing to park discussions on free trade until they have thrashed out the cost of the multibillion-euro UK divorce settlement.

Putting a brave face on a concession that may further strengthen the tactical dominance of the EU, the Brexit secretary, David Davis, insisted his initial retreat remained consistent with long-term government strategy.

The ‘tactical’ dominance of the EU? Surely strategic. As always the lack of appreciation that the UK is not equal to the weight of the rEU is quite something to behold. And what – reasonably – could Davis or the UK do to redress that simple fact? Absolutely nothing. The irony of May’s line about Corbyn going ‘naked’ into the negotiations is underscored ever more sharply by this. There’s even a sort of parochialism in the following analysis…

But a politically weakened UK team appeared eager to show signs of progress on Monday even if it meant accepting priorities set by their counterparts.

The chief EU negotiator, Michel Barnier, made clear that he believed Britain was in no position to dictate the timing of the negotiations.

Absolutely – the election did nothing to support the authority of this British government. But nor did it substantively change the equation.

Meanwhile meant to get to this last week but so many events. Stephen Kinsella in the SBP writes gloomily on the above this . Very very gloomily. Discussing the election result in the UK he notes that ‘Britain has no strong parliamentary consensus to implement Brexit. There is no strength and even less stability… a weak government delivering a bad Brexit deal is very bad news for Ireland’.

Then he notes that the Irish Government Economic Evaluation Service, a group of about 80 economists established to assist the civil service on economic matters, recently held a conference in Dublin Castle on the impacts of Brexit on this island.

First up the idea that the EU [or rather its largest states – wbs] has more to lose from a hard Brexit than Britain seems to be incorrect. 

[research showed] neither France nor Germany will be hurt by a hard Brexit, because they have other markets in the EU 27 to sell to.

That seems obvious doesn’t it? That’s the advantage of being in a common market. It’s near enough tautological.

But… hold on. There’s proximity as well as size.

The countries hurt most by a hard or soft Brexit will be… 

Will be?

…will be… Britain and Ireland.

How badly?

In Britain, they will see negative trade effects of between 20 to 40 per cent in goods and in services and up to 50 per cent drops in external demand. 

Germany will be minimally hit by a hard Brexit even though it is Britain’s largest export market. The good news? Germany and other nations will increase export to Ireland under any Brexit scenario. 

But…

Research from Mike Fahy and the Dept. of Finance showed how exposed parts of the Irish economy are to a hard Brexit. When he showed his research there was an audible intake of breath among the conference participants. Sectors where we have a comparative advantage in pro ducting goods and services over other countries where economic theory tells us we should specialise, are exactly where we might get hit hardest. 

Sectors producing meat, animal and dairy products, sectors producing manufactured good and beverages, chemical production and financial serves, these are especially badly hit in any Brexit scenario. Eight of the EU’s top 12 most exposed products to Brexit are Irish exports. Worse; after any Brexit, many of Ireland’s cash-cow sectors are vulnerable ego third-country trade deals. 

There’s more.

Research from the Dept. of Agriculture… showed the agri-food sector contributes 7.6% of our national output. It is responsible for 8.6% of all employment – about 170,000 people – and 10% of goods exported. The beef industry exports nearly 50% of its stuff to Britain. The dairy industry exports 22%. Almost 69% of all our prepared consumer foods go to the UK. 

These are areas we are world class in and exposed should any tariff arrangement be put in place. Tariffs of between 50 and 60% might be levied on beef and dairy, for example, effectively shutting them out of the market (this analysis also ignores the voliatitly sterling is underogin at the moment). 

Pick any scenario you like, the results are all negative, and for hundreds of thousands of our citizens, especially in rural Ireland. 

All this is information from the state and state Departments. It points to – at a minimum – significant job losses for Irish workers.

Jesus Christ.

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Comments»

1. GW - June 20, 2017

Figures – not good at all.

Thanks for the data. Is this report from the Irish Government Economic Evaluation Service available in full anywhere?

Is it this one (PDF warning)?

And the Irish border issues seem to have slipped down the agenda in the capitu-sorry-negotiations.

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WorldbyStorm - June 20, 2017

I think it has to be the doc. I can’t find another. Troubling reading.

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WorldbyStorm - June 20, 2017

BTW +1 rs the border

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bjg - June 20, 2017

My impression, from reports of the press conference [eg that cited above https://www.theguardian.com/politics/2017/jun/19/uk-caves-in-to-eu-demand-to-agree-divorce-bill-before-trade-talks%5D, is that the Irish border issues slipped down the agenda in terms of scheduling, but not in importance, simply because the underlying issue is very difficult to resolve. The Irish papers this morning [online versions, but I can’t read the Irish Times stories] seem to be underestimating the difficulty.

However, there is one possible optimistic interpretation, captured in this:

Hopes for swift progress on the issue of the border between Northern Ireland and the Republic were dashed when the joint negotiators revealed it would no longer be in the first wave of their working groups, but would be subject to a separate, slower dialogue.

“This is a technically difficult issue,” explained Davis. “I am certain it is solvable but it will probably take us until the end of the process when we decide what our customs and free trade priorities are.”

The extent of border controls required will depend on the nature of the UK’s relationship with the EU, so it really can’t be determined until that relationship becomes clear. It may be that EU negotiators are hoping that at some stage UK ministers will realise that their only choice, short of abandoning Brexit or sleepwalking into calamity, is an EEA arrangement.

But as …

[…] British officials admit they did not bring any prepared negotiating papers to share with their counterparts – insisting instead that their overall ambitions were made clear by the government’s white paper and Lancaster House speech.

… I suspect that it will be some time before there adults available in HMG.

bjg

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WorldbyStorm - June 20, 2017

Agreed bjg, and just on your last quote above,are the UK govt stupid? Their approach is incredibly naive.

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bjg - June 20, 2017

Here’s a Grauniad piece on compromise

But neither [Labour nor Conservative] seems willing to admit that withdrawing from the EU is going to involve painful trade-offs.

https://www.theguardian.com/commentisfree/2017/jun/19/10-brexit-compromises-theresa-may-britain

And here’s some evidence of stupidity,

https://www.theguardian.com/commentisfree/2017/jun/20/not-just-uk-benefit-brexit-eu

bjg

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bjg - June 20, 2017
WorldbyStorm - June 20, 2017

I suspect they won’t think twice about that prediction and it’s outcome

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EWI - June 20, 2017

The Irish gov, ever to the fore in f#cking over any notion of the EU diing the right thing.

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2. GW - June 20, 2017

And now they have a pause until I think July 10th while the British side tries to cobble some papers together. But then they have all the time in the world.

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3. sonofstan - June 20, 2017

“British officials admit they did not bring any prepared negotiating papers to share with their counterparts – insisting instead that their overall ambitions were made clear by the government’s white paper and Lancaster House speech”

That’s just astonishing.
Ties in, in a way, with the sheer inability to actually govern that we saw over the last week, when faced with a major disaster.

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WorldbyStorm - June 20, 2017

+1 i guess when the very idea of the state having agency is contested small wonder they can’t manage it. Problem is they’ve gutted other alternatives who previously they might Blame which means they cannot evade responsibility any longer because people know intuitively the state is the only entity which can and should take some action.

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bjg - June 20, 2017

HMG has a problem in that, if it actually tried to state a logical position, it would be forced to acknowledge that (a) Brexit might not necessarily be desirable and (b) getting there might not be easy. As Leavers argued to the contrary on both counts, any attempt to clarify positions is likely to lead to internal conflict, and so HMG relies on Handwavium and on the traditional way of communicating with foreigners: speak loudly and wave your arms about.

Any uppity foreigners http://www.telegraph.co.uk/news/2017/05/30/jeremy-corbyn-would-alone-naked-brexit-talks-says-theresa-may/ can be reminded https://www.independent.co.uk/news/uk/politics/theresa-may-nuclear-weapons-first-strike-michael-fallon-general-election-jeremy-corbyn-trident-a7698621.html of the fate of the Sultan of Zanzibar https://en.wikipedia.org/wiki/Anglo-Zanzibar_War.

bjg

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sonofstan - June 20, 2017

Sort of confirms it: John Crutice…

““I do just wonder whether the people advising her actually understood the electoral system and the way it operates these days well enough,”

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sonofstan - June 21, 2017

And yet more evidence of the fact that the government are in freefall:
“The Northern Irish party [DUP] accused Downing Street negotiators of being chaotic”

No deal apparently.

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4. theordinaryman2017blog - June 20, 2017

As a firm “remainer” having voted as such in the referendum, my worst fears are already being realised with a weak negotiating team giving concessions on the first day. You are right to have fears about jobs in Ireland and I have no reason to believe this wont also be the case in the the UK. Leaving the EU was a bad decision and one the public I suspect will come to rue, but entering into negotiation with no real public mandate, a weak minority government is nothing short of a disaster. God help us all.

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5. sonofstan - June 20, 2017

They’re making a list…

https://www.theguardian.com/politics/2017/jun/20/eu-citizens-in-britain-to-be-asked-to-register-for-post-brexit-status

I’ll sign up if they give me a nice badge to wear…

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WorldbyStorm - June 20, 2017

Urghhhh…. this new outward looking Britain…eh?

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Michael Carley - June 20, 2017

“Stocktaking”?

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sonofstan - June 21, 2017

I’ve pointed this out before, but the usage is slippery; there are currently not 3m EU citizens in the UK, but 63m

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