Ireland has come through Brexit in much better shape than Britain

The British government’s decision last week to defer the introduction of planned post-Brexit customs checks once again on food products coming from the EU is just the latest confirmation of the disaster the Leave campaign has foisted on the UK.

This is the fifth time that the government in London has postponed introducing checks on food, plant and animal produce being imported into the UK from EU countries. The most recent deadline of October 31st has now been put back to the end of January next year.

By contrast, the EU has imposed customs formalities on goods being exported from the UK since the country left the union in January 2021. That has left British food producers fuming that the imposition of checks on their fresh food exports has given their counterparts in Ireland and the continent a competitive advantage for the past three years.

As an example of how futile it is to predict future events it is worth recalling all the prophecies of doom for the Irish economy that took place in the immediate aftermath of the Brexit vote in June 2016. In a piece last December, this newspaper’s economic correspondent, Eoin Burke-Kennedy, recalled the consensus that dominated thinking here in the years following the UK decision to leave the EU.

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[ As Brexit regretters are learning, the clock of history cannot simply be turned back ]

“The news cycle here was a veritable blizzard of reports and warnings about the threat to the economy, particularly to the food sector. Enterprise Ireland and others warned businesses to Brexit-proof themselves by diversifying away from the UK. There were even predictions that Ireland might suffer a greater economic hit than the UK itself. But guess what? There hasn’t been a hit.”

Figures from the Central Statistics Office show that trade in goods with the UK, both exports and imports, has risen steadily since Brexit after an initial wobble but, by contrast, the UK’s trade with the EU has suffered a big hit. Research indicates that EU/UK trade is down by 15-20 per cent.

Former British prime minister Boris Johnson claimed that there would be no non-tariff barriers to trade as a result of the EU/UK free trade deal he negotiated. Like so many of Johnson’s promises before and after the referendum, this has proved to be entirely false. UK firms have faced higher import costs because of the weaker pound, longer lead times to source inputs, difficulties administering EU rules on VAT and the inconsistent application of customs rules on the EU side.

A recent British Chambers of Commerce survey indicated that more than half of all small- and medium-sized firms in the UK were struggling to adapt to the new rules for trading goods. On the EU side, the increased red tape seems to have deterred many businesses on the continent from trading with the UK altogether.

If the UK has had a bad Brexit, Ireland has done pretty well. Even if the UK finally gets around to putting up customs checks Irish exporters will have had plenty of time to prepare, and it is clear the notion that Ireland was going to fare worse than the UK has proved completely wide of the mark.

Competent political leadership in Dublin and incoherent policymaking in London have enabled this country to come through the Brexit process in far better shape than anybody could have imagined in June 2016

The fear was that Brexit would be particularly hard on indigenous Irish firms that export up to 40 per cent of their produce to the UK. In fact, food exporters have managed to hold on to their traditional share of the British market as well as expanding their exports to the EU.

Northern Ireland’s unique position with a foot in both the EU and UK markets has also helped. It means goods moving between Northern Ireland and the Republic are not subject to customs checks. Some British-based traders have apparently established bases in the North to facilitate trade with the Republic, while some companies in the Republic have replaced imports from Britain with imports from the North.

As far as trade between Ireland and the rest of the EU is concerned, there has been a significant shift in trading patterns with a decline in the use of the UK landbridge. That process has been facilitated by a number of new direct shipping lines between Ireland and the continent.

Of course that should not encourage complacency that the current state of things will continue indefinitely. Irish firms need to be ready for the day when the British finally get their act together on customs formalities. A more serious threat in the longer term would be if the UK opts for a significant divergence from the EU on regulations.

However, given that the Labour Party, which is expected to take over the reins of power before the end of next year, is committed to a closer relationship with the EU the prospect of major regulatory divergence seems unlikely in the medium term at least.

Competent political leadership in Dublin and incoherent policymaking in London have enabled this country to come through the Brexit process in far better shape than anybody could have imagined in June 2016. Paradoxically, the Government here has received no credit from the electorate for its approach while most voters in the UK still appear oblivious to the appalling error they were enticed into making.