Brexit threatens Northern Ireland more than rest of UK, says Davy

A British exit from the EU would have a bigger impact on Northern Ireland than any other UK region, Davy stockbrokers has warned.

In a new report on the European referendum in June, the firm said the agricultural sector in the North would be most at risk there following a Brexit.

Davy said there was a very strong possibility that London would need new constitutional settlements with Northern Ireland and Scotland after any vote to leave the EU.

“This would most probably involve a much greater devolution of economic powers to Stormont at exactly the time when Northern Ireland would be looking for an even greater helping hand from Westminster to make up for its EU losses,” the firm’s Market Watch report said.

A British vote to leave the union could have an economic impact for up to a decade, Davy said. Casting doubt on the viability of Norwegian-style trade deal between Britain and the EU after a Brexit, it said the negotiation of a “bespoke” trade arrangement would be likely to drag on for years.

Although Davy still believed Britain would stay in the EU, it said Brexit could bring sterling towards parity with the euro in a worst-case scenario. Such a development would see sterling drop by 25 per cent, even after recent declines in the currency’s value against the euro.

Net beneficiary

“Northern Ireland will be impacted by Brexit much more than any other UK region. While the UK is a net contributor to the EU, Northern Ireland as a region is a net beneficiary,” Davy said.

“Most importantly, Northern Ireland is the only part of the UK which shares a border with another EU member country. It has taken decades to reach the current fluid movement of trade and people and to open exchange of economic, cultural and political life across this border.”

From a purely business and economic perspective, Davy said the EU generally, and the Republic of Ireland specifically, mattered more to the North than the internal markets of the UK.

Historically important

The report said: “56 per cent of Northern Ireland’s historically important manufacturing sector exports go to the EU and the majority (37 per cent) to its southern neighbour.

“Most at risk is the agricultural sector, of which 82 per cent operates under the EU’s Common Agricultural Policy and which is due to receive an estimated €3 billion in EU aid for the period 2014-2020.”

The report went on to note that pro-Brexit campaigners have acknowledged that “Northern Ireland will definitely require significant agricultural subsidies.” This was accepted in the pro-Brexit camp even as the argument was made that most regions and sectors in the UK would thrive outside the EU.