The Brexit referendum decision has yet to be played out and financial markets are biding their time before making any serious moves.
But some consequences are already being felt in places not previously anticipated. In its latest announcement, the Bank of Ireland pointed to Britain's Brexit decision as having a major impact on the group's defined benefit pension schemes which it claims has led to a deficit of around $1.6million at the end of June, significantly higher from December, when it stood at $980million.
According to some economists, Ireland is feeling the effects from the U.K.’s vote to leave the European Union more than any other country with exporters warning that the plummeting pound will erode earnings and economic growth just as the recovery from the 2010 international bailout was finally taking hold.
Irish shares have declined, not least because the U.K. is the top destination for the country’s exports after the U.S. and the biggest for its services. In addition, Northern Irish nationalists have been demanding a vote on reunification and together with the loss of its key ally, Prime Minister Enda Kenny finds himself in a precarious position.
Since 1973
Britain and Ireland had joined the European Economic Community in 1973 and since then, the two countries remain strongly connected economically as well as culturally and linguistically with Ireland doing close to $45 billion of trade with the U.K. About 30,000 people a day cross a border between the two countries that was renowned for gun-running during the Irish Republican Army’s campaign against British rule.
Close to 380,000 Irish citizens living in Britain were eligible to vote in the Brexit referendum and when Theresa May took over as British prime minister last Wednesday, Kenny was among three leaders she spoke to, along with Germany’s Angela Merkel and Francois Hollande of France.
The consequences of the Brexit for Ireland are mind-boggling according to some economists especially after an eight-year recession which is only now starting to dissipate. A major issue is Northern Ireland which continues to hang in the balance. Skirmishes continue between Protestant and Catholic gangs which split over Brexit, with the largely Protestant Democratic Unionist Party backing “Leave” and the mainly Catholic Sinn Fein campaigning for “Remain.”
Analysts are not worried about renewed violence at the border between the two nations. Rather they are focused on the economic impact. About 40 percent of Irish food exports go to the U.K. and with the pound’s drop rippling across the economy, agricultural exporters and farmers are the most exposed to possible additional tariffs.
According to former Prime Minister John Bruton, “When both countries joined the EU, by virtue of being part of something bigger, it fostered a relationship based on equal respect. That’s now at risk of being lost, with the U.K. heading off in a different direction.”