A-Fisking we shall go : Paul Goldsmith on Brexit (HuffPoUK Edition)

Friday night is FISKING NIGHT! This week we have another clueless, but no doubt pleasant and earnest brit, opining on why we should come home to mama…

At some point the people of Ireland are going to have to choose between Britain and the EU.

It’s not a binary choice. It’s a continuum. We were very close to the UK. Then we separated. As time goes on we separate further. Brexit will accelerate that.

There are plenty of reasons why they might go with Britain. They are geographical, economical and political.

Ok…lets see.

The 30th of March 2019 marks a unique point in the joint lives of the United Kingdom and the Republic of Ireland. It will be the first time in their history that one has been inside the EU and the other isn’t. Before 1st January 1973 they were both outside what was then the European Community, which meant they were free to decide on their own arrangements with each other. From that date they were both inside the EC and then EU, meaning they were both in the Customs Union and then the Single Market.

Christ on toast. A nation that is x15 larger than another (UK) doesn’t decide mutually beneficial arrangements with the smaller.  The UK is about to find out very fast and very painfully that the larger dictates to the smaller. We were in every sense bar geopolitical an appendage of the UK. A taker. Not a partner.  We were not even in a customs union fully till 1992, with the advent of the Single Market.

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And, your no longer that important, really.  Why on earth would we cut off trade with our leading partners because you all had a fit of the vapours?

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After Brexit, assuming the UK leaves the Customs Union and the Single Market, numerous problems will arise, and whilst some of them will affect the UK, far more of them will affect the Republic of Ireland. The cumulative impact could destroy the country’s finances in such a way that they might find themselves with the choice of relying on continual EU and IMF bailouts whilst inside the EU or leaving the EU and tying themselves in with the UK, maintaining the arrangements that have always been their lifeblood.

 Hmm. Where to start here. Lots of lifeblood with the UK all right.

In the UK, the way Ireland’s economy works only tends to come into focus when we hear about their tiny corporation tax rate (12%) and the draw that these arrangements are for large tech companies like Apple and Google to locate their European headquarters in Dublin. But during my recent week in Ireland I discovered far more about just how connected the two countries are, and how two particular industries – agriculture and finance – are so reliant on the UK that I can’t see how Ireland can be in if Britain is out.

Sigh. He spent a whole week. Give the man a clap. Because, of course, we do nothing in Ireland bar farm and finance. Here : have a look.

GNI sources

I’ll start with financial services. Financial services companies can operate anywhere inside the EU under what are known as ‘passporting’ rules, which are essentially a series of regulations that apply to everyone operating in the industry within the EU. This ensures minimum standards of service, security and similar ways of working that makes it possible to move money anywhere needed and compete fairly. British companies have billions of pounds in the Republic of Ireland because of this concept of passporting.

 

  1. Passporting is nothing whatsoever to do with holding accounts in different states. It is about the free movement of SERVICES. Financial services. The ability, in principle, for banks to offer cross-border services. You seem to think that it’s about the ability to hold accounts cross-border. It’s not. Here is a simple and here a more complex account.
  2. Some of this is down to having local accounts in a trading partner which uses a different currency. It’s called treasury management.
  3. A very very large proportion of these cross-border flows and stocks live in the International Financial Services Center. They have very very little to do with the domestic economy.
  4. The UK is not the largest part of the international financial system in the IFSC. A good long read of the BIS locational banking statistics would be in order.

When the UK leaves, if they are no longer part of this system, those billions will probably be repatriated to Britain, because moving them back and forth to Ireland will become much harder.

Nope. Or, not necessarily.  See above. The USA isn’t in the EU. US companies have no problem whatsoever transferring monies back and forth. Ditto Japan.

This would decimate the Irish financial services industry. Because Ireland is in the EU, it would not be able to make a separate deal with the UK to keep this going. So Ireland’s financial services industry would need Britain to be either in the EU with it, or outside with it, rather in the different positions they would be in.

Not in the least true. It starts with an assumption grounded in a misconception and moves to an assertion.

But the problems in financial services are nothing compared to the problems that will occur in agriculture. Agriculture, remember, includes both crops and also livestock. Crops go off, so it is better if they are be exported to countries that are near, and quickly. If the UK leaves the Customs Union, that would mean a massive administration barrier, expensive in both time and money, would be created for Irish agriculture.

And, as we saw above, its cows all the way down. Nothing but cows. And a horse.

To give two contrasting examples: there is a Baileys (Irish Cream alcoholic drink) bottling plant in Mallusk in Northern Ireland, making 60% of all the Baileys produced. The plant relies on the Republic of Ireland for its milk. Brexit could mean that milk has to be stopped at the border and might have tariffs on it, and suddenly both the Baileys plant and the Irish dairy farmers might not be able to operate.

 OR, it might mean that the distillery moves south. Or that there is a FTA agreed for goods (relatively easy, services not so much).  Or that NI gets some sort of special deal.

Second example is the transfer of horses, particularly for events like Cheltenham. At the moment they travel on lorries and ships and can pass through Britain easily and unimpeded. Britain leaving the Customs Union makes that a lot more difficult.

 Funny, Irish horses manage to compete and win in the UK when we had customs controls. One did it in the year I was born. I wonder how they did it. And, even in Kildare, where I live, not everyone relies on horsies for their crust. Why there are even academics.

Again, it’s not like Ireland and the UK can come up with a special arrangement for these things. Ireland need to abide by whatever deal the EU negotiates.

True.

Of course, I haven’t even mentioned the largest elephant in this particular room – the border between Northern Ireland and the Republic. That’s because my conversations with people in Dublin suggests that they barely want to consider what would happen if a hard border re-appears, yet they simply do not see what on earth is the alternative if Britain is leaving the Customs Union.

We don’t want a hard border. But we might have to have one.  Beyond that…not sure what the paragraph is saying. Borders bad? Yep. But didn’t the UK want to leave to control its borders?

All of this made me realise that whereas my original thought was that at some point there could be a referendum to unite Ireland, I think instead there will soon need to be a Referendum on Ireland’s EU membership.

Have you even seen the latest Eurobarometer figures? 

The uniting referendum had seemed possible given the problems Brexit would cause and how the people of Northern Ireland, even the Unionists, must have noticed that they were ignored during the Referendum campaign and again during the 2017 election.

“Area man realises area men ignore area”

But I wonder, given the problems I have talked about above, given the fact that the Republic of Ireland sees people drive on the same side, sees the same plugs being used, and speaks the same language as the United Kingdom, whether it makes more sense for the Irish people to put themselves wherever Britain are once Brexit is finished?

It’s the plugs that make this great. To be fair, BSA plugs are great. But, nah. We tried being part of the UK. Didn’t take. Hasn’t, for 100y, been an issue. It is beyond contemptuous to suggest that 100y of independence and 50y of growing economic separation will be thrown in the bin because of a tiff in the tories.

 

 

1 thought on “A-Fisking we shall go : Paul Goldsmith on Brexit (HuffPoUK Edition)

  1. P

    The levels of delusion in the UK and the abject failure of the media to expose them — for fear of being monstered as unpatriotic or losing the licence fee, or because they’ve drunk the Kool-Aid — are extraordinary. Have a look at https://www.eureferendum.com today for some commentary on this and some first cracks — Christopher Booker in today’s Telegraph in particular. Anyway, now we can understand what happened to Germany in the 1930s as never before.

    I wonder how accurate the figures are for exports to Ireland can be. Like many in Ireland I got tired of finding goods for sale online (on Amazon e.g.) by UK sellers who either would not ship overseas or would only do so at an extortionate cost, FAR in excess of actual shipping costs (often more than the value of the item). Accordingly, I have used services like parcelmotel and parcelwizard, of which there are now several, which reship from NI at a modest cost. I have purchased cameras, electronics and other valuable items. I can’t help suspecting all this online shopping may be not be included; after all the value of the contents of the contents has been material only for insurance purposes and is not declared externally.

    The EU, at customary glacial speed, has been looking at harmonising shipping costs across the EU to promote crossborder trade. When it finally happens could we see NI’s parcel delivery services sending things in two directions, or will things come to a halt? Most likely, a lot of Irish online shopping will be diverted to the rest of the EU.

    Reply

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