Five of Ireland’s 60 mushroom farms have so far gone out of business since the [Brexit] referendum, including two this week”. So reported Reuters last Friday.
The mushroom industry, which employs 3,500 people in Ireland, sells four fifths of its produce to our nearest neighbour. It is, in many ways, the Irish canary in the Brexit coalmine.
With Sterling collapsing, in large part as a result of the decision to leave the EU, many mushroom producers in Ireland are facing going out of business.
This is just the beginning of the negative consequences for this country of Britain’s decision to cut many of its ties with its neighbours.
When recent Brexit developments were last analysed in this column four weeks ago, one conclusion was that the chances of a “hard Brexit” had risen since the referendum. Everything that has happened over the past month points to an even greater likelihood of a more isolated UK.
Last week the French president explicitly said that Britain must pay a price for leaving. The week before the German chancellor said that if Britain rejects the right of Europeans to live and work in Britain, then Europe will impose new barriers on British exports into Europe. Just as Angela Merkel was making that comment, her British counterpart, Theresa May, was telling her conservative party’s annual conference that she would not accept continued free movement of people from the EU.
It has always been clear to anyone who maintains even a passing interest in European affairs that the best-of-both-worlds option, which English withdrawalists had long claimed was available on departure from the EU, was never real. No country can have the economic upsides of single-market access without the sovereignty downside of playing by the collective rules. As that reality is becoming more obvious, and hard choices are having to be made, it is increasingly clear that the May administration has decided to prioritise migration control over access to the EU’s single market.
That will make the consequences of Brexit for Ireland even more damaging. Those consequences are already being felt, with the effects of Sterling, by one measure, falling to a 168-year low point last week, being the most immediate.
It takes time for currency movements to fully affect the operations of businesses. The one-fifth fall in the value of the pound vis-a-vis the euro since the referendum will go on negatively affecting the revenues, profitability and – ultimately – employment levels of companies in Ireland which sell into the British market well into next year.
If the pound falls further, the impact will be even greater and longer lasting. Unfortunately, that is more likely than not to happen. Growing uncertainty around a hard Brexit and the sheer scale of Britain’s uncompetitiveness (no large economy in the world earns less from foreigners relative to what it pays out to them, a measure that is the best indicator of an overvalued currency) is likely to see to that.
If the outlook of Irish exporters to the UK in the short to medium term is bad owing to currency movements, it is even worse when it comes to how trade barriers are likely to evolve. The harder the Brexit, the higher new trade taxes and customs barriers will be. More barriers to trade will make Irish-made goods and services more costly in Britain, something that is entirely separate from the exchange rate issue – a second whammy, if you like.
The food industry has most to fear, not only because Britain is by far it’s biggest market, but because of the threat posed to its market share from non-European food producers in the event of a hard Brexit.
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