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The Economic Implications of BREXIT for Northern Ireland

The Economic Implications of BREXIT for Northern Ireland

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Author

Paul Mac Flynn

Summary

The government of the United Kingdom has decided to hold a referendum on membership of the European Union on the 23rd of June 2016. While Northern Ireland constitutes just under 3 per cent of the total UK population, it is likely to be the region most affected by a UK exit from the EU. Northern Ireland is the most peripheral region of the United Kingdom both geographically and politically and it is also the only region to share a land border with the EU. There is no way of predicting exactly what relationship the UK will have with the EU after a BREXIT and thus longer term impacts are difficult to forecast. However, the mechanisms by which BREXIT could affect Northern Ireland can be assessed by examining the areas of the economy that would be most vulnerable to a disruption in EU trade and supplementary issues such as EU funding, foreign direct investment and cross-border cooperation.


Northern Ireland goods trade with the European Union is focused heavily in the Agri-food, Textiles, Transportation and other smaller manufacturing sectors. Manufacturing employment in Northern Ireland is skewed towards sectors that have greater trade with the EU and are therefore more vulnerable to disruption from BREXIT. Service exports are concentrated within the Wholesale and Retail sector and are skewed toward the Republic of Ireland. The Wholesale and Retail sector is Northern Ireland's largest employer and along with the tourism sector it could see the largest labour market impact.


Leaving the EU may put a further strain on Northern Ireland's public finances through a loss of CAP and structural funds, but a variety of outcomes are possible in this regard. The attractiveness of Northern Ireland as a destination for Foreign Direct Investment and the sustainability of the All-Island economy also pose unique challenges for Northern Ireland in the event of a BREXIT.

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