No Deal Brexit Will Have ‘A Profound And Long Lasting Impact’ Report Says

A “no deal” Brexit will lead to “a sharp increase in unemployment, with at least 40,000 jobs at risk”. That was one of the stark messages to Councillors at a meeting of the Brexit Committee of the Fermanagh and Omagh District Council, held at the Grange Omagh this week.

Boris Johnson warned his words connecting Jo Cox to Brexit 'have consequences'

Boris Johnson warned his words connecting Jo Cox to Brexit ‘have consequences’

The Department of the Economy delivered a report to Councillors in which a bleak picture was painted for businesses in Northern Ireland.

It stated that: “Northern Ireland faces a broad range of direct and indirect impacts in the event of a ‘no deal’ exit. The most striking element of the impacts is how interconnected they are…That all these changes will happen at once, in a way that is not mitigated by a settlement between the EU and UK, makes it very difficult to set a limit to the impact on NI.”

The report explained that “a ‘no deal’ would have a profound and long-lasting impact on NI’s economy and society,” and it went on to summarise some of those risks and impacts:

• ‘No deal’ could lead to a sharp increase in unemployment, with at least 40,000 jobs at risk, based on EU export exposure.

• ‘No deal’ would have immediate and severe consequences for both NI’s competitiveness in the all-island economy and NI’s place in the UK internal market.

• The impact of EU tariffs and non-tariff barriers will mean that whatever the Irish Government and / or the EU may do or not do, many businesses will no longer be able to export to the Irish market, leading to a major reduction in NI’s exports to Ireland.

The impact of EU tariffs could reduce NI’s exports to Ireland by 11 per cent and the inclusion of non-tariff barriers could see a decline of 19 per cent.

• Analysis of import volumes and commodity prices shows that NI businesses would have increased vulnerability to low cost non-EU imports in the GB or NI market.

This risk is particularly acute for the agri-food sector where certain commodity prices for larger agri-food exporting non-EU countries are much lower than local prices (especially for beef).

Prime Minister Boris Johnson

Prime Minister Boris Johnson

• ‘No deal’ therefore places a twin pressure on NI’s access to the EU and UK markets, leaving businesses with very limited options and the NI economy facing an absolute reduction in exports and external sales.

• Tradable services is similarly exposed. For example, businesses exporting services to Ireland would face an average increase in the cost of doing business of 14.5 percentage points.

Our ICT sector is particularly vulnerable, as it is facing a 24 percentage point increase in the cost of doing business.

• Pressure on businesses to change behaviour to remain viable or the exploitation of differentials by organised crime groups could see an increase in smuggling. The impact on communities – particularly in Border regions – is difficult to quantify, but any increase in non-compliance or evasion would change behaviours and attitudes in communities, which, over time, will significantly impact on the culture of lawfulness in NI.

• The prospect of lower prices on some goods may appear good news for consumers.

However, NICS analysis shows that only a small minority of the goods on supermarket shelves are from NI and, therefore, likely to decrease in price. Many more are ultimately sourced from beyond NI, so there is much greater risk of price rises due to a further depreciation in sterling.

As such, both consumer spending and the capacity for businesses to grow would be limited as drivers of growth.

• Under a ‘no deal’ exit, NI’s FDI attractiveness would be negatively impacted.

A ‘no deal’ would see losses in the medium to long run of six per cent per annum in the case of the number of FDI projects and of 7.6 per cent for FDI-related new jobs.

(Source – Impartial Reporter – Colm Bradley – Senior Journalist – 23/09/2019)

 

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