BREXIT : THE ROAD AHEAD

Presentation of 12 min

2 questions for other groups to answer

Relevant

Analytical

Issues

Effects on UK , EU and then bordering down to Developing countries

The economic impact of Brexit is negative, for both the UK, Ireland and the rest of the EU.

1. The biggest impact will be in the UK itself and in Ireland, its closest trading partner.  For the
UK, any trade arrangement reached after Brexit – barring full membership of the EU trading
bloc, which the UK has ruled out – will be less favourable than current arrangements.
Economists say that any new trade opportunities elsewhere will not make up for losses in
trade with the EU. Weaker sterling since Brexit has already cut the purchasing power of UK
consumers and uncertainty has hit investment, with growth estimated to be 1 to 2 per cent
per annum lower over the couple of years.
2. For Ireland, growth remains strong and the main short-term impact has been via a weaker
sterling exchange rate, which is good if you’re going to the UK to buy a second-hand car but
bad if you’re an exporter to the UK market. 
3. The main threat to Brexit comes from barriers to exports to the UK and also delays and
higher prices for importers of UK goods to Ireland. Forecasters have estimated that in a
harder version of Brexit, where the UK leaves the EU trading bloc, the Irish economy could
be 4 to 7 per cent lower in a decade’s time, with most of the hit in the first five years. A no-
deal Brexit means the economic effect would be more severe and happen more quickly

The UK’s departure from the EU means Northern Ireland is leaving the bloc too so checks would be
required along the 499-kilometre Irish Border as different trade rules would apply north and south
after Brexit. The Border in Ireland will become the only land border between the UK and the EU
after Brexit.

The 1998 Belfast Agreement laid the foundation for Northern Ireland’s peace process with many all-
island rules and institutions. Neither side wants the return of border checks because of the risk to
peace whereby a physical border infrastructure would be considered a potential target for
paramilitaries.

The Backstop is an insurance policy that the EU and UK have agreed to include in the withdrawal
agreement to avoid this happening. Both sides see it as a last resort to be triggered in the event of
no better solution being found to avoid a hard border in a EU-UK trade deal. But there is a
sequencing problem: a withdrawal treaty must be agreed before a trade deal, hence the need for
the backstop first. (Follow this link for an in-depth explainer on the Border and the
backstop, or this link for an explainer on how the backstop became centre stage again after the
election of Boris Johnson as Conservative party leader and British prime minister)