Posted on Thursday 15 October 2015 by Ulster Business
Pictured at the Cracking Cross-Border Business Breakfast are: Wendy Austin, BBC Radio Ulster, Oliver Mangan, Chief Economist at AIB, Peter Legge, Tax Partner at Grant Thornton and Peter Stafford, Partner at A&L Goodbody.
Don’t underestimate the negative impact a UK exit from the European Union would have on the Northern Ireland economy.
That was the message from AIB’s chief economist who was speaking at a cross-border business breakfast this morning where the potential for a sharp fall in economic output across both the UK and Ireland in the aftermath of a so-called Brexit was highlighted.
Oliver Mangan said the situation would be made worse in the absence of a future trade agreement.
“In truth, post any Brexit, there is no guarantee of a free trade agreement between the UK and EU being reached and in that case the UK would still have to adhere to EU rules and pay EU budget contribution,” he said, adding that the lack of a deal could impact foreign direct investment (FDI).
“While currently the UK is the biggest recipient of FDI in the EU, around half of that currently comes from the EU and a further 30% from the US. In a Brexit scenario the EU may get more FDI by not having a trade deal with the UK.”
And he said the time lag associated with a Brexit would also be damaging.
“In practice it takes two years for a country to leave the EU and as the UK has no veto on exit terms, they will have to follow the full process. In that context the full economic impacts may take up to a decade to materialise because of the changes in trade and FDI that occur over time.
“When you also factor in the distinct possibility of sterling weakening greatly ahead of any BrExit, it is not surprising that such a move by presents a big risk to both the UK and Ireland economies.”
The event was organised by First Trust Bank, a subsidiary of AIB, along with corporate law firm A&L Goodbody and business advisors Grant Thornton.
Other speakers at the event included Peter Legge, Tax Partner, Grant Thornton who examined UK/ROI Cross Border Tax Issues and Peter Stafford, Partner, A&L Goodbody who considered the overhaul of companies legislation north and south in recent years with a particular emphasis on what this means for owner-managed businesses here.