Ireland breathes sigh of relief on Brexit

·2-min read

Irish Prime Minister Micheal Martin has expressed relief after neighbouring Britain agreed a last-minute trade deal with the European Union which he said was the "least bad version of Brexit possible".

Ireland, the EU member state most exposed to the fall-out from Britain's departure, was an important player during four rocky years of exit negotiations in which it sought to shelter its highly exposed agricultural sector and avoid a hard border infrastructure with the British region of Northern Ireland.

"There is no such thing as a good Brexit for Ireland, but... I believe the agreement reached today is the least bad version of Brexit possible, given current circumstances," Martin said after Britain and the EU announced the deal on Thursday.

While Irish firms have diversified into new markets since 2016, cutting trade to Britain to 9 per cent of total Irish goods exports last year, its nearest neighbour still accounts for around one-third of its food and agricultural exports.

That sector would have been battered by heavy tariffs if Britain had left the EU on World Trade Organisation terms. Ireland's large beef industry, which sells almost half of what it produces to Britain, would have been subject to tariffs of 72 per cent.

Preserving the delicate peace in Northern Ireland without allowing the United Kingdom a back door into the EU's single market through the UK-Irish land border was one of the most difficult issues during the first phase of talks, which culminated in the Withdrawal Agreement in late 2019.

The British government angered the Irish government by threatening to unilaterally scrap elements of that deal, but withdrew the threat as the outline of a trade deal emerged in recent weeks.

"The peace process had been protected, peace funding has been protected, Ireland's place in the single market of the EU has been protected," Irish Foreign Minister Simon Coveney told RTE radio.

While Ireland's large pharmaceutical and multinational tech sector has shielded the economy from the worst of the COVID-19 crisis, around 20 per cent of its workforce is now permanently or temporarily unemployed.

That means it could ill-afford what Martin said could have been a second "appalling" economic shock from a "no-deal" British exit from the EU.

Ireland based its budget for 2021 on the assumption that the talks would fail. A deal could add 3-4 percentage points to the finance department's gross domestic product forecast range of +1.7 per cent to -2.1 per cent for next year, Finance Minister Paschal Donohoe said at the time.

"Businesses in Ireland and across the UK can breathe a collective sigh of relief today," the British Irish Chamber said in a statement.