Regarded as one of the greatest challenges facing the country since the foundation of the Irish State, the impact of the UK’s decision to leave the European Union will affect Ireland more than any other EU Member State.
Brexit will herald both challenges and opportunities, according to NUI Galway Professor of Economics Alan Ahearne, who believes Galway should “hope for the best but prepare for the worst”.
The former IMF advisor addressed a public meeting on the topic on Monday, when he warned that the country must prepare itself for a “hard Brexit”, which may have a profound effect on certain sectors of the local economy, namely agriculture and tourism.
“The implications differ from business to business and from sector to sector but for some sectors of the economy, the effects are going to be very large,” he says.
Monday’s public meeting, organised by Fine Gael TD Hildegarde Naughton, was aimed at providing information and expert opinion on Brexit for businesses and individuals, with Professor Ahearne among a number of top experts discussing the issue. Other keynote speakers at the event included Minister for Foreign Affairs and Trade Charlie Flanagan, and Kevin Sherry, executive director of Global Business Development with Enterprise Ireland.
Regarded as one of the biggest threats to farming in generations, Professor Ahearne anticipates that agrifood and agriculture in particular will be hit hardest by Brexit.
He stresses that Galway should prepare for an “economic storm”, adding that areas where agriculture and agrifood are important will face significant challenges.
“There are parts of Ireland where agriculture and agrifood are a bigger share of the economy. If, for example, you look at the border around Cavan and Monaghan where they have a lot of poultry farms, they’re very exposed and similarly if you go down into Cork and around Tipperary and the Golden Vale, they’re very dependent on agriculture. We’re less so but still there are parts of the county where agriculture is very important.”
He warned that traditional manufacturing sectors in Galway, such as basic metals, may suffer as they “could see very high tariffs” imposed over the next few years.
“Those are important sectors in Galway in terms of employment and we are more exposed than many other counties in that area.”
However he feels that the effects will be “much more modest” for other businesses in the region, such as multinational companies including the medical device and ICT sectors.
He notes that the tourism industry in Galway has already experienced some of the effects of Brexit due to the weakness of the sterling. “That’s made for a more challenging environment for hotels and for the tourism sector in this region.”
While a lot of the focus at the moment is on the Irish goods and services being sold into the UK and how they’ll be affected, Professor Ahearne says we should also be thinking about the goods and services we import from the UK.
“The prices of those goods may rise significantly in the next few years because there may well be tariffs put on those goods as they enter into the EU which means entering into Ireland so a lot of the retailers in the Galway region are UK-based retailers and a lot of the stuff we buy, particularly food products come from the UK so we could see a significant increase in the price of that.”
Asked what businesses in Galway can do to prepare for the full onset of Brexit, he advises, “The reality is we’re going to be selling less stuff into the UK and so we’ve got to find new markets and I think that’s something that businesses will have to give a lot more thought to. We’ll be selling more to Germany and France and Italy and Spain and all these countries and so learning how to open up new avenues and new markets and find new customers over there will be increasingly important.”
While Brexit poses many challenges, Professor Ahearne says there are also opportunities to be seized.
“We’d like to see more foreign direct investment because businesses that are located in the UK at the moment are selling into the rest of the EU but in two years’ time they will be out of the EU so some businesses will relocate but want to remain within the European Union and Galway may well be an attractive location for some of those businesses.”
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