The American Chamber of Commerce Ireland hosts its Annual Dinner this Friday. Such an event is quite significant in the light of the possibility of a Brexit. The most recent data we have, published last month showed that in 2014 FDI from the US into the EU totalled €1.81 trillion. The UK receives 28% of this figure with Ireland punching well above its weight in receiving 5%. So is Brexit such a bad thing for Irish trade, and particularly our relationship with the US?
Short term, I can’t see how Brexit would be good for our economy. By a massive margin they are our biggest trade partner. There are many other potential factors to consider such as the free movement of people and our interaction, both economic and otherwise with Northern Ireland.
Long term, this could open a lot of opportunities for Ireland. In working with US companies on a daily basis, I hear first-hand why they have set-up here. Contrary to popular belief, many of these businesses are not just here for the low tax base. Believe it or not, there are many more advantages than that. We speak English, we have a skilled workforce across IT, Finance and Pharmaceuticals (key areas for US investment) and we’re also the closest country to the US in Europe. It may only be an hour or two better than others but this is significant when much of this investment is coming from the far off lands of Palo Alto in California. I don’t for a second think that all of a sudden 28% of FDI will be re-routed to Ireland but a very small % shift would be beneficial nonetheless. Other European countries like Norway, Switzerland, Iceland and Liechtenstein have formed a European Free Trade Association and if the UK formed something similar, the longer term impact on our economic relationship with the UK would be minimal.
It’s not looking likely at the moment with latest polls showing 45% voting to stay in and 35% voting to move out. Given the British still maintain the imperial system of measurement, the Sterling and Scotland, there is a history of resisting change. I’m not an advocate for Brexit as there’s a lot more at play here than FDI but I am an advocate for seeking out the silver lining in such a situation. Building upon the relationship we have with US businesses, we can only benefit as a nation no matter what the decision is on June 23rd.