Brexit & Ireland - The Morning After

So it has actually happened - Britain has voted to leave the EU, and the Prime Minister David Cameron has fallen on his sword already. The biggest question of all is whether the UK will remain part of the Single Market which is the EU's free trade area. Minister for Finance Michael Noonan, has already said that he would prefer if the UK was to remain in the free trade bloc. The full extraction process may take up to 2 years, so as things stand this morning, the outlook from an Irish perspective is as follows:

Sterling Sterling is falling rapidly against the euro and fell 8% in the hours after the result became clear. It is safe to assume sterling will remain very weak for a considerable period. If you invoice your client in Sterling or get paid in sterling, your income will be affected by 5-10% in the short term.

Economy It is expected to have an immediate negative consequence for the British economy. That will have a spill-over effect on Ireland. Exactly how big that effect is going to be is hard to tell. Already stockbrokers have begun to reduce their forecasts for the Irish economy for this year and next. The Irish bond market has seen recent selling pressure although the cost of borrowing for Ireland remains relatively low.

Border There will be uncertainty over the status of the border with Northern Ireland, the reintroduction of the border could turn the clock back on the progress following the Peace Process.

Single Market There will be two years of negotiations between the EU and the UK regarding its future relationship with Brussels. However, that decision will be made by the EU, Ireland cannot negotiate its own agreement with the UK. Making Brexit painless is not in the interest other European countries who will want to make it difficult for other countries to leave. For the Irish Government keeping the UK in the Single Market will be the biggest battle of all and it will drag on for long time. Icon Accounting will keep continue to monitor the situation from the point of view of the Contractor and Irish businesses alike so stay tuned for more updates.