With the general Elauction underway we can expect the minds and energies of our political leaders to be focused elsewhere for the next month or so. However, the world doesn’t stop when the posters go up. Neither, to be fair, does the government or administrative policy making, but it slows. In the context of BREXIT, this may be problematic
BREXIT looms large. If, and it is increasingly looking likely when, it happens, it will be enormously problematic. Part of the problem will be around what will happen when all the pieces stop moving. Part will be around the risks (which can be quantified) and the uncertainty (which definitional cannot be) of the process and the outcomes.
The plan, in so far as it can be ascertained, from Cameron is to obtain from the EU the maximum amount of concessions (real or politically saleable as such) which can be put through with the minimum amount of trouble. This in essence limits the material he can work with as no EU leader will want to go near a treaty change that requires a plebescite or even if possible a parliamentary vote. His problem is that literally nothing he brings home will satisfy the BREXIT voices. Having pushed and goaded the UK polity to the brink of what was politically unthinkable why would they stop now? No logic, no evidence, will appeal to the emotional. And this we have seen.
The draft outline deal that was agreed to last week has not satisfied the UK punters, with a new poll showing an increase in support for BREXIT and dissatisfaction with the proposed deal. What should be of greater concern perhaps is not that there is a majority of the UK (excluding northern Ireland, who were not it seems polled) in favour 53-48 of leaving ; it is that there is also the very real prospect of a BREXIT leading to the breakup of the UK. While the overall is 53-48 for BREXIT Scotland is, as has been, very solidly 60-40 for staying. There is zero chance of a BREXIT vote with a Scottish no being pushed down the throats of the SNP, raising the likelihood not only of a UK outside the EU but a UK disrupted. What of Northern Ireland? Polling on the issue seems scant – which is a classic case of whistling past the graveyard. The most recent poll suggests Scottish levels of support for staying in the EU. So what we face in the summer may be a complete rupture of the political, economic and social framework that has governed these islands for at least a century if not more.
Would Northern Ireland stay in a BREXIT-ed UK if the scots leave? The dilemma facing unionists would be hideous, while one can imagine the nationalist parties rejoicing. Would they go independent? Would they want to come here? Where would THAT leave our fiscal space? Would a EnglWales polity, dominated by a tory economic ideology that would not have been out of place in the early years of Queen Victoria and determinedly isolationist as it would have shown itself to be continue to support either state at all, never mind to the extent that they have done? Both the polities are in serious deficit situations, and while an independent Scotland could well thrive the same is not as clear for any putative Independent Republic of Northern Ireland. Depending on who you ask the annual subvention to the Assembly is between £5-£10b, or €6.5-€13b euro. Per annum. That’s 3 to 6 times the total from the USC, which we plan to abolish. An independent post BREXIT scotland would compete against Ireland in many of the areas we hold dear, from exports, to FDI attraction, to being “english speaking and common law” friendly etc. As it is they beat us hollow in many areas – take Whiskey for example
In the making of the deal we see confusion and tentativeness also when bold and clear positions need to be set. The main planks of the plan are twofold, from an economic perspective. First there would be potential for the UK to declare an emergency (but it is not clear if that has to be accepted by the others) and to restrict the rights of EU migrants to in work benefits, on a tapering basis for up to 4 years. Second there is a proposal for a two tier bank approach across the EU. Both of these could and should worry Ireland.
First there are approximately 400k Irish citizens in the UK. Are we really happy to see a situation whereby an Irish citizen working receives less benefits than their otherwise identical UK counterpart? Even if some deal were cobbled together just for us, how can we sell that to the Polish and Lithuanian governments? The proposal appears to define “EU migrant” as anyone also who is married to an EU citizen. Like it or no we are in this together and if we do not hang together for workers rights we will hang separately. An attack on the workers rights of Lithuanian and Romanian workers is an attack on us, and it is worrying that we were not front and center going “no”. Remember, literally nothing that Cameron comes back with will satisfy his eurosceptic wing. So there is little to be gained by pandering. Second, our largest bank, one half of the Dyarchy Bank of Ireland obtains a large part of its profits from the UK. While these are in low risk engagements, we are aware that national treasuries are the ultimate backstop for bank losses regardless of where realised. A looser and more risky environment overseas is not what we need for Irish domiciled banks. Indeed, given that the banks overall have gotten away with the last crash the degree of culturally embedded moral hazard therein must now be enormous. Rather than less regulation we need more, to make the banking system more like a utility and to hive off and forever seal from public money the investment banking elements. A sop to the City of London in an environment where cross border banking remains enormous is dangerous.
Overall the BREXIT juggernaut rolls onward. We cannot afford to take our eye off the potential for it to do serious damage to us.
Column in Irish Examiner, 6 February 2016