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Brexit debate success

Today’s Brexit debate held by the Londonderry Chamber of Commerce at the Waterfoot Hotel in Derry was a major success.  The event was packed with local business leaders and fully booked in advance.

Chief executive Sinead McLaughlin said:  “This has been another major success for the Londonderry Chamber of Commerce.  The question of in or out of the EU is of vital importance to our local businesses.  Our region is potentially more affected by the decision than any other UK region.  We had an excellent panel of speakers, both in favour and against Brexit.  I also want to thank our sponsor, Danske Bank.”

Two of the lead speakers were Angela McGowan and Brian Doherty.

Angela McGowan of Danske Bank said:

“There is no definitive study of the economic impact of the UK’s current EU membership or the costs and benefits of withdrawal.  That is because many of the costs and benefits are subjective or intangible.”  But she pointed out that a poll by the Financial Times of 100 leading economists found that more than three quarters believed that withdrawal would be harmful to the UK’s economy, with just 8% believing it would be beneficial.

It is true, she said, that the UK pays more into the EU’s budget than it takes out – by about £8.5bn.  But putting a price on the indirect benefits of membership is impossible. Those benefits include political stability, free trade, free movement of labour, free movement of capital, larger markets and cheaper imports.

Ms McGowan added: 

• Brexit is the main risk factor facing the UK economy.  Continued higher uncertainty until the referendum is held may damage the recovery.  This could particularly damage investment.

• Alternative trade arrangements with the EU after a Brexit are not simple, may involve tariffs and may not be cheap.  Those arrangements may take several years to negotiate.

• Northern Ireland has a stronger trading relationship with the EU than does the UK as a whole.  While 45% of the UK’s exports go to fellow EU member states, in the case of Northern Ireland this is 57%.  A Brexit would require a major shift in export focus, towards Asia, emerging markets and other non-EU nations.

• Brexit is likely to lead to a devaluation of sterling, making imports more expensive and exports cheaper.  Some analysts predict sterling might devalue by 20%.  

• While Northern Ireland expects to receive increased levels of foreign direct investment through a reduction in the corporation tax rate, this effect could be reversed by Brexit.

“Overall, Danske Bank markets judge that Brexit is a lose-lose game for the both the UK and the EU,” she said.

Brian Doherty, the former head of the NI Government Legal Service, was another of the main speakers.

He told the audience that there were a number of implications of Brexit that are unique to Northern Ireland.  These include:

• Aspects of the devolution settlement are subject of an International Agreement, with cross-border arrangements allowing for shared sovereignty.

• EU assistance in the form of “Peace Funding”

• The UK’s only land border with another Member State.

There are other issues which are of special relevance to Northern Ireland:

• The EU Single Market in an all-island setting

• The importance of agriculture to Northern Ireland

• Policing and Justice Co-operation

• EU Funding (other than Peace Funding)