Northern Ireland's hopes of attracting more companies to invest in the North by introducing a new, lower rate of corporation tax in 2018 "would be reversed" by Brexit, a leading economist from a respected Dublin-based economic think tank has warned.
Dr Edgar Morgenroth, associate research professor at the Economic and Social Research Institute (ESRI), told a 640-strong audience at a Brexit debate held in Queen's University in Belfast that analysis shows European Union membership has been a "key factor" in attracting FDI to Britain and Ireland.
This implies that any reduced access to the EU market would result in a reduction in FDI levels in Britain and Northern Ireland, and potentially result in relocation of investments to EU members, he said.
Brexit would therefore “undo the positive effect” that the UK hopes to achieve by reducing the general rate of corporation tax to 18 per cent from April 1st, 2020 and also negate the effects that a reduction in corporation tax levels could deliver for the North.
Numerous studies had also shown that EU membership increases trade and that a UK exit would imply a reduction in trading volumes – possibly by about 3 per cent for the Republic of Ireland but by as much as 10 per cent in Northern Ireland, Dr Morgenroth said.
Overall he warned that “anyone” involved in trade between the UK and the EU could not escape the “significant impacts” Brexit would bring.
He also outlined a range of possible implications of how a Brexit would affect businesses and people living and working in the North, with a particular emphasis on Northern Ireland might fare as the “only part of the UK with a land border” with the EU.
One of the key areas he focused on was how a UK exit could result in restrictions on the “free movement” of people between Ireland and Britain for work reasons. Latest figures showed that, in 2011, 14,800 people commuted regularly between Ireland and Northern Ireland, he noted.
Dr Morgenroth said Brexit opened the debate about possible passport controls at the Border which he said “would, at best, be inconvenient and, at worst, have significant regressive effect on North/South co-operation”.
He said Brexit was not just an issue for businesses or political leaders in Northern Ireland but for everyone because it could affect their day to day lives.
“Brexit will impact on you,” he warned.”While a Brexit might make some people in the UK feel better, it is likely to make everyone poorer.”
The event was one of the largest public Brexit debates to date in the UK and also featured Dr Esmond Birnie, chief economist, PwC; Angela McGowan, chief economist, Danske Bank and Paul MacFlynn, economist, Nevin Economic Research Institute.
