25 May 2016
Irish chances with Brexit
By: Karsten Riise
I newly attended a conference about the possible exit of Britain from the EU. One of the speakers, a guy from Oxford, claimed to have calculated an effect of ‘Brexit’ of “between 0.1% and 3.9% reduction” in British GDP as far away as 2030. I am always amazed by the hubris of my own profession. To tell 200+ dignitaries that you can calculate any effect with that precision 15 years into the future requires more than economic insight – it requires that you have a telephone line to God or a crystal ball.
The effect of a ‘Brexit’ to many countries (including Denmark) were according the Oxford-wizard fractions of meticulous calculated decimal-percentages. I would have preferred to say “no measurable effect” - but the illusion of economic wizard-precision obviously had to be showed-off on a slide.
Interestingly, the only country in the world, for which the economic wizard from Oxford could point at a severe effect of ‘Brexit’, was Ireland. Because Ireland has a lot of trade with Britain, the Oxford economist believed in a significant negative net-effect on Ireland of a British exit from EU.
How shortsighted economists can be. Too often, they just project past knowledge into the future instead of looking at new potential developments.
As I see, a ‘Brexit’ will give Ireland at least two great chances to exploit – at the expense of England:
Ireland can attract more non-European investments
Non-European companies, which seek to enter the EU, will often have preference for an English-speaking country. Especially if they are from USA. Until now, US-American investors had two English speaking EU countries to choose from: the smaller Ireland and the much bigger Britain. After a ‘Brexit’, Ireland will be the only English-speaking country left in the EU. Great for Ireland. ‘Brexit’ for Ireland will mean back to basics. Ireland grew rich by being a base for US American firms wanting to enter EU, and after a ‘Brexit’ Ireland will the next coming 30 years additionally be also one of the most logical places in EU to start for all the up-coming Asian companies which will want to enter the EU.
Ireland can build ‘City of Dublin’
The ‘City of London’ is the biggest capital market in EU. Apart from its size, two of the attractions of the ‘City of London’ are the English language, liberal tax and finance rules, plus of course an infrastructure. If Britain leaves EU, ‘City of Dublin’ should go for the kill – take market shares from ‘City of London’.
The ‘City of Dublin’ has the English language, the islander’s outlook to the whole world, and the ‘City of Dublin’ can copy the tax and financial rules, and the infrastructure, that made ‘City of London’ great. The physical distance is short, and the internet is instantaneous.
I do not envision that ‘City of Dublin’ will overtake ‘City of London’ after a ‘Brexit’. I just believe, that if ‘City of Dublin’ after a ‘Brexit’ can just pick 10% of the enormous financial volume of the ‘City of London’, that would be a fantastic opportunity for Ireland.
‘Brexit’ can be a win for Ireland.
For Britain itself, ‘Brexit’ may have much more negative political and economic impact than the moderate “-0.1% to -3.9%” which the ‘wizard’ foresaw. But that is different story, which I described in harsh colors long ago.
Karsten Riise
Partner & Editor
CHANGE NEWS
CHANGE MANAGEMENT
