by Frank Schnittger
Sat Jul 21st, 2018 at 01:37:03 PM EST
[Update] To my shock and amazement, the Irish Times has published my letter in full:Brexit – a gift for Ireland?
David McWilliams is something of an Irish euro-sceptic but has an interesting article in the Irish Times. Riffing off Boris Johnson's "F*ck business" comment he argues that the Brexiteer led Tories have become an anti-business party and that that represents an opportunity for Ireland. I have drafted a letter to the editor as follows:
David McWilliams writes that "Economically, the real story is how the UK went from [being] the herald of free enterprise to "F**k business" in one generation." (Opinion, 21st July). The irony is that the UK's economy was "the sick man of Europe" when it joined the EU in 1973, and it has done very well out of EU membership by expanding it's services sector massively and taking advantage of the single market.
The problem is that the de-industrialisation pursued since Margaret Thatcher and the globalisation enabled by the EU has also increased regional and social inequality massively, and this, more than anything, is what drove Brexit. The Eton/Oxbridge elite have also twigged that their sense of entitlement doesn't cut much ice in Brussels and so they have jumped on the bandwagon "to take back control".
There will be blood when the great unwashed of Sunderland realise they have been duped and that there will be even greater inequality and poverty under an Eton/Oxbridge led UK free of Brussels constraints. The Eton /Oxbridge crowd were never much interested in getting their hands dirty and actually making things - for them industry is a dirty word. Vulture capitalism, rent seeking, and ripping off other people's hard earnings is their thing.
So yes, Brexit, and especially a hard Brexit is an enormous opportunity for Ireland as the sole remaining larger English speaking member with a similar legal system and cultural outlook. But we should be beware of this creating even greater regional and social inequality in Ireland. A few banks and vulture funds relocating a few staff and a lot of paper financial assets to Dublin may do wonders for our already bloated GDP figures, but little for the plain people of Ireland.
We should focus on attracting a lot of smaller/medium sized UK industrial companies who need access to EU markets to smaller and medium towns in Ireland. These smaller companies typically don't have "corporate strategy" departments or foreign language capabilities. Moving a few miles across the Irish sea to an English speaking common law jurisdiction would be the easiest option for them. 100 jobs in Leitrim would mean a lot more to the local economy than a few financial whizz kids moving to Dublin.
Leo Varadker should appoint a full time Brexit minister dedicated to travelling the roads of north and Midlands England meeting small business leaders who never see a British government Minister and whose Brexit concerns are being ignored. Tariff and non-tariff barriers may make their EU exports unviable and threaten the future of their businesses. If Boris won't help them, perhaps we can.
The big missing in a lot of mainstream economic debate is the emergence of great wealth whilst a lot of people are still living in poverty. Public services have been eviscerated and most new jobs are relatively low paid. Ireland experienced 7% headline GDP growth last year, and unemployment is now down from a peak of 16% in 2012 to 5%.
However the national GDP figures are inflated by as much as 40% by the asset shifting activities of multi-nationals and real personal consumption is growing only slowly. The younger generation, in particular, is faced with lower pay rates, much higher housing costs, far longer commutes, and poor public services. Homelessness is a growing national crisis. Public health services are a melange of long waiting lists despite Ireland having the fourth highest per capita spend on healthcare in the EU.
Some of this is a hangover from the Great Recession and the public austerity policies which exacerbated it. There is a huge infra-structural deficit which is only very slowly being addressed. Investment in housing increased by 27% last year and pay rates are rising slowly as the economy approaches full employment.
However Brexit is the big cloud on the horizon. Already Irish exports to the UK have fallen by 8% this year despite a 5% rise in overall exports. The IMF warns that a no deal Brexit could cost Ireland 4% of GDP and 50,000 jobs. In that context, it would only be prudent for any Irish government to take what steps it can to offset the damage.
Ireland already suffers from Dublin expanding too rapidly for its infrastructural capacity while more rural parts of the country struggle. Financial firms moving from London to Dublin because of Brexit will only exacerbate that problem while many of the job loses caused by Brexit in the agri-food sector will effect rurally based jobs much more.
Areas outside Dublin have much lower housing costs and greater infrastructural capacity to accommodate more businesses and employees and the demands they create. Not everyone wants to be or has the aptitude to be a financial whizz kid so we also need to create more employment opportunities for manual, craft and technical workers and for those who wish to live in more rural areas.
However the government needs to get over its obsession with waiting for the "market" to respond to all unmet needs. It is low cost affordable housing which is most in deficit and yet the government is only slowly expanding public house building. There is a near private sector monopoly in the provision of Broadband, particularly to more rural areas which means performance is patchy and poor. Businesses can't locate to more rural areas without high performance affordable broadband and an upgraded transport network.
Hence my response to David McWilliam's article. The critical challenge facing the government is to ensure that Brexit doesn't exacerbate already excessive regional, social and inter-generational inequalities. Brexit may well represent an opportunity as well as a cost factor for the Irish economy, but it's most pernicious effect could be to increase inequality within Ireland.