The Political and Economic Implications of Brexit on the Island of Ireland

Introduction

On June 23rd 2016, Great Britain shocked Europe and the rest of the world by voting to leave the European Union through a national referendum. The referendum, held in June 2016, stemmed from an election promise made by former British Prime Minister David Cameron prior to the 2015 General Election. Cameron promised to hold a referendum on Great Britain’s membership in the EU to curb political support for the United Kingdom Independence Party (UKIP), and the referendum was called British Exit, which was commonly referred to as Brexit. Cameron promised “a very simple in-or-out choice to stay in the EU on new terms, or come out altogether.”[1]

Campaigning groups such as Vote Leave and Britain Stronger (more commonly known as Remain) became the loudest advocate for exiting and remaining in the EU, respectively, after the referendum’s inception. Vote Leave emphasized the issue of immigration, specifically targeting questions of national and cultural identity. Their greatest advocacy tool targeted savings on economic investment: they estimated that exiting the EU would correspond to an additional $350 million USD per week. This increased governmental revenue, they argued, would enable better financing of the National Health Service, the British governmental healthcare provider.[2] In contrast, the Remain group focused on the economic benefits of staying within the European Union, citing the ease of transnational movement and access to commercial markets as key assets of long-term growth in the nation.

In the days preceding the vote public polls showed that Remain had gathered slightly more support than its counterpart, leaving many voters believing that Brexit would be voted down. However, with a seventy two percent voter turnout rate, fifty one point nine percent of Great Britain’s population voted in favor of leaving the EU with the remaining forty eight point one percent voting for the status quo.[3] While Vote Leave celebrated a historic triumph the markets immediately began to decline. At one point, in the hours after the vote, the pound dropped eleven point one percent, to a $1.33 USD equivalent, its lowest level since the mid-1980s.[4]

At the time of writing the Brexit vote’s impacts remain too recent to tell. In other words, the long-term economic and political effects are not yet understood. Despite this, it’s clear that Great Britain’s decision to leave the EU will have significant impacts on those countries most closely tied to it. One such country is Great Britain’s neighbor, Ireland. The focus of the paper that follows is to explore the political and economic effects of Brexit on both Northern Ireland and the Republic of Ireland.

History of the European Union

The European Union, officially formed in 1992, emerged from a desire for peace and stability across Europe at the conclusion of World War II. This international institution would serve to end the bloody wars that dominated the first half of the 20th century. The roots of the European Union are found in the European Economic Community (EEC) established in 1957 by Belgium, France, Germany, Italy, Luxembourg, and the Netherlands. Throughout the 1970s and 1980s, more countries joined the economic community including Denmark, Ireland, and the United Kingdom, all by national referendum. After the fall of the Berlin Wall in 1989 and the general collapse of the communist bloc, Europe saw an opportunity to realign its institutional purpose to achieve a more integrated, united continent. A wave of countries introduced referendums, all voting to join the EEC, which eventually evolved into the present day European Union. While established on the premise of peace and stability, the EU’s focus, over recent decades, has shifted towards the facilitation of trade between member states. The EU now operates a single market, allowing the free movement of goods, capital, services, and people between loosely regulated transnational borders.[5] Twenty two of twenty eight member states have facilitated the ease of travel by creating the Schengen Area, a coalition of countries who have agreed to abolish passport and border controls at their common borders.[6] Furthermore in 2002 nineteen out of the twenty eight member states adopted the Euro as their official currency, allowing for easier and more efficient European based commercial transactions.

Great Britain has had a long and fraught relationship with both Europe and the European Union, and there are both historical and contemporary factors at play in explaining the fifty one point 9 percent vote for leaving the EU. Beginning with the former, Britain, as the empire it once was, has a clouded history with that of prominent European powers like France and Germany. For some, membership within the European Union is seen as relinquishing control to countries Great Britain once used to dominate.[7] In addition, Great Britain is one of the biggest financial contributors to the European Union; however, given the 2008 global economic recession, British citizens have seen their financial contribution to the EU used to help bail other European countries, such as Spain, Portugal and Greece, out of financial distress. Outside of economics, immigration also served as a large divisive issue in the Brexit campaign. Vote Leave campaigners argued that Britain must have stricter border controls, claiming that many immigrants are taking jobs away from British citizens, a mindset that is fundamentally anti-Europe. The UK Independence Party capitalized on these complex issues, aiming their politics at those that disagreed with European ideals to achieve one main goal: to leave the European Union. The Independence Party began to gather intense support prior to the vote citing sovereignty, border control, and immigration as their main reasons for voting in favor of Brexit. With the emergence of the Syrian refugee crisis, immigration became a growing concern in Great Britain, with fears of diminishing employment opportunities lurking in the forefront of the British working class. In an attempt to combat UKIP’s growing political support, the Tory Party, under David Cameron, promised to hold an in-or-out referendum on Great Britain’s status within the European Union. He explained that an “In” vote would be on renegotiated terms, and an “Out” vote would mean a divorce from the Union entirely. Evidently, the simple, yet extremely complicated in-or-out vote created a clear divide across Great Britain.

Reshuffling of British Cabinet & Article 50

After the results of the Brexit referendum, David Cameron, on the steps of No.10 Downing Street, announced that he would be stepping down as Prime Minister of the United Kingdom. Cameron explained:

“I was absolutely clear about my belief that Britain is stronger, safer and better off inside the E.U. I made clear the referendum was about this, and this alone, not the future of any single politician, including myself. But the British people made a different decision to take a different path. As such I think the country requires fresh leadership to take it in this direction”.[8]

With a vacancy for the Prime Minister position campaign groups on both sides of the referendum began advocating for replacement Prime Ministers, with Boris Johnson, former Mayor of London, garnering the most support early on. Other campaigners aiming for the role of Prime Minister included Theresa May, Michael Gove, Stephen Crabb, Liam Fox, and Andrea Leadsom. Though their initial efforts were strong, these candidates slowly began withdrawing from the political race. Liam Fox was first after receiving the least amount of votes from the Conservative party. Not long after, Crabb withdrew his name and pledged support to Theresa May. Soon, only two candidates remained: Theresa May and Andrea Leadsom. Once Leadsom quit the race, Theresa May was elected leader of the Conservative party, Prime Minister, and political leader responsible for negotiating the terms of Great Britain’s divorce from the EU. In her first act as Prime Minister May decided to reshuffle her cabinet by making the following appointments:

Philip Hammond: The former Foreign Secretary who campaigned to remain within the European Union. Hammond was appointed to Chancellor of the Exchequer. He will be responsible for steering Britain’s economy through Brexit and post-Brexit negotiations.[9]

  • Boris Johnson: The former Mayor of London has become the new Foreign Secretary. Johnson was one of the foremost voices for Vote Leave’s campaign and will now be responsible for a role that looks very different with Great Britain on the outside of the European Union.[10]
  • David Davis: An avid Vote Leave campaigner and former political rival to David Cameron, Davis has been appointed as the newly created: “Secretary of State for Exiting the European Union.” This position is known otherwise as the Brexit Secretary.[11]
  • James Brokenshire: Brokenshire was the former Immigration Minister and campaigned to remain in the EU. He has been newly appointed as the Northern Ireland Secretary. Brokenshire takes over for Theresa Villiers, who resigned from the cabinet.[12]

But what jurisdiction do these individuals have with respect to their country and the European Union? The right of a member state to withdraw from the EU was introduced for the first time with the ratification of the Lisbon Treaty in 2009. Under Article 50 in the Treaty of the European Union, procedural requirements are set out for a country that wishes to withdraw.[13] Article 50 must be triggered by the member state withdrawing in order for formal negotiations about leaving the European Union to begin. These negotiations must be completed within two years. If a country fails to make an agreement within these two years, its membership automatically ends, unless the European Council and the member state jointly decides to extend the negotiation period.[14] Following the June referendum, Cameron refused to invoke Article 50, leaving it to his predecessor to determine when to start the clock on departure negotiations. Prime Minister Theresa May has said she will invoke Article 50, thus initiating formal negotiations on Brexit, by the end of March 2017, leading to a full exit by 2019.[15]

UK High Court Decision

On November 3rd 2016, the British government’s plan for enacting Article 50 and leaving the European Union was brought to a halt. The UK High Court ruled that Prime Minister May and her cabinet must get approval from Parliament before the process can begin.[16] Beforehand, May had planned to start the legal process of leaving the E.U in March 2017. However, numerous British citizens opposing Brexit appealed to the UK High Court on account of the referendum’s violation of their inalienable rights as a European. More specifically, under the European Communities Act of 1972, Great Britain inherited certain legal rights created by EU law. Claimants of the High Court recognized that, by invoking Article 50, Great Britain is violating these rights.[17] The High Court verdict: only Parliament can legislate for such rights to be removed.

Thus, the High Court ruled that it is impermissible for the Prime Minister to legally authorize the notification of Article 50 without the approval of Parliament. It also must be noted that the Referendum Act of 2015 — the act that authorized the holding of the Brexit vote – only made provision for an advisory referendum and did not give statutory authority for the triggering of Article 50. To little avail, Prime Minister May suggested that initially all EU rights would remain legal upon Britain’s departure from the Union and that, over time, the British government would slowly reform these rights into long-standing law. This uncertain horizon, however, did not appease the claimants of the High Court case. Soon after this verdict, May and her cabinet appealed the High Court’s decision to the UK Supreme Court. The Supreme Court will gather all 11 justices — the largest court ever assembled in Great Britain – to have a four-day hearing in early December 2016.[18] Prime Minister May still intends on enacting Article 50 by March 2017. If the decision is upheld, the government will want legislative authorization from Parliament as quickly as possible. Upon this prospective outcome members of Parliament will be given a chance to uncover future governmental positions on negotiating Britain’s departure from the EU. Parliament has required that Prime Minister May outline her exit strategy for Brexit, but May refuses to do so, claiming that it would “impede her flexibility in negotiations, preventing Britain from getting the best deal possible.” [19]

In opposition to the High Court’s decision, the government claimed that executive powers were sufficient to give notice to the EU on behalf of Parliament. However, uncertainty looms, as the High Court did not specify the form of vote or approval needed from Parliament. If the vote is a simple yes-or-no question, members of Parliament will be forced to make very affirmative, and potentially polarizing, decisions. Such acts will put into questions these politicians best judgment and may compromise on the desire of their constituents. MPs are also worried about holding onto their seat in Parliament, especially if a general election is called early, adding to the difficulty in deciding how best to vote. If desired, May could call a vote of no confidence and seek an early general election, hoping to gain a wider mandate of Vote Leave supporters in Parliament. The implications of this move are, for now, unclear and I think, given the bigger picture, that this scenario is unlikely. The High Court decision does not directly prevent Brexit but merely challenges the legality and constitutionality of those responsible for invoking Article 50.

Pre-Brexit Ireland

In the lead-up to the June 23 vote, the leadership of the Republic of Ireland grew increasingly worried, for a variety of reasons. Firstly, as a member state of the EU, the withdrawal of any country from the Union would affect Ireland, especially if that country was its next-door neighbor and economic partner. Secondly, Northern Ireland is a part of Great Britain, and the Republic of Ireland has a long and complicated history with the North. Both countries also have a tense relationship with the United Kingdom. The Republic of Ireland was granted independence from Great Britain after the signing of the Anglo-Irish Treaty of 1921. While the treaty marked independence, it also marked the start of the Irish Civil War. Division over the support and rejection of the treaty established the foundation of two modern political parties, Fianna Gael and Fianna Fáil, respectively.

While there were many details and agreements within the treaty, the most conflicting agreement was regarding the geopolitical boundary between Northern Ireland and the “Irish Free State”.[20] In accordance with the Anglo-Irish Treaty 1921, six counties on the island of Ireland, (Derry, Down, Antrim, Armagh, Fermanagh, and Tyrone) belong to, and are governed by Great Britain.[21] The wording of the Treaty is as follows:

“…shall determine in accordance with the wishes of the inhabitants, so far as may be compatible with economic and geographic conditions, the boundaries between Northern Ireland and the rest of Ireland, and for the purposes of the Government of Ireland Act 1920, and of this instrument, the boundary of Northern Ireland shall be such as may be determined by such Commission”.[22]

The commission referred to above is the Boundary Commission, a committee established in 1924 with one representative from each of the governments of the United Kingdom, the Irish Free State,[23] and Northern Ireland. When the Boundary Commission first convened, Irish nationalists looked to alter the original border, drawn in 1920 under the Government of Ireland Act, in the hopes of conglomerating significant areas with nationalist majorities. However, a copy of the original border was leaked to The Morning Post in 1925, causing outcry from both unionists and nationalists. As a result, the Boundary Commission could do nothing but maintain the original border, hoping to avoid upsetting either side in the process of adjusting what already existed. The Irish Free State eventually became Éire, and, after full independence, became the Republic of Ireland in 1949. The Anglo Irish Treaty of 1921 gave rise to a divided Ireland and resulted in a civil war. The border between Northern Ireland and the Republic was a source of tension for groups on both sides, eventually leading to a period of intense violence during the 1970s and beyond. The period 1968-1998, known as The Troubles, brought political violence and terrorist attacks to the destabilized region causing the deaths of over 3,600 people as well as thousands of injuries.[24] The violence occurred between an overwhelmingly Protestant majority who wanted to remain part of the United Kingdom and a nationalist Catholic minority who wished to become part of the Republic of Ireland. In an attempt to end violence, cross-party talks began in 1996, but nothing was achieved until the signing of the Good Friday Agreement in 1998(to be discussed in more detail later).[25]

Irish Reaction

A week after being named the new Prime Minister, Theresa May met with Irish Taoiseach[26] Enda Kenny. May assured both nations that she wanted to make Brexit a success for them, commenting that “our discussions today have focused on Brexit; the particular impact on the Republic of Ireland and what this means for our economic relationship, travel between our countries, and the peace process.”[27] These three areas of discussion are of critical importance to the future of Ireland and to its relationship with Great Britain. Taoiseach Enda Kenny echoed May’s statement outlining the common issues they share after the referendum decision. Kenny acknowledged that “it’s not the outcome that we wanted in Ireland, but we respect the decision of the UK electorate, and we now must work out the consequences of that.”[28] Kenny also addressed the people of Ireland in a statement, emphasizing similar areas of concern but comforting the people with reassurance that “there will be no immediate change to the free flow of people, goods, and services.”[29] At the top of the Irish government’s priority list are the implications of this vote for Northern Ireland and the relationship between the North and South, something that will require careful consideration in the future and in ongoing conversations and negotiations. Taoiseach Enda Kenny closed his statement with a reminder to the Irish people that Ireland will remain a member of the European Union, noting that it is “profoundly in our national interest” and that the next phase of negotiations with Great Britain may not start for months.[30] As these discussions transpire, one factor remains evident: Brexit will have a significant impact on both Northern Ireland and the Republic of Ireland.

United Ireland

In the final count of votes from Northern Ireland, fifty five point eight percent of people voted to remain, with only forty four point two percent voting in favor of leaving the EU. With a majority of Northern Irish citizens wanting to remain, it is no surprise that the idea of a United Ireland became a topic of household conversations and political speeches across the island. In a British-Irish conference in September 2016, Taoiseach Enda Kenny said that the possibility of Irish unity must be considered in Britain’s negotiations to leave the EU. “The possibility of unity by consent must be maintained as a valid democratic option into the future,” Kenny explained, “that means that, if there were democratic consent to Irish unity at some time in the future, there must be a mechanism to ensure that democratic decision can be implemented within the European Union, as was the case in Germany.”[31]

The possibility of a United Ireland has not been seriously discussed in Irish politics, or amongst the Irish people, since the institution of the Good Friday Agreement. Since achieving independence, the Republic of Ireland has operated a common travel area with Northern Ireland, although security checks were implemented during wartime and The Troubles. As it stands, the border shared between Northern Ireland and the Republic is the only part of Great Britain that will remain connected to a part of the European Union once Great Britain leaves the international institution. Some politicians suspect that a hard border with passport control and customs checks will be implemented along the 317-mile border between the North and South. Enda Kenny, however, announced his intent on preventing such border construction, emphasizing that this is in the best interest of all three governments: “All three administrations share the common objective of wanting to preserve the common travel area, and an open border on the island of Ireland.”[32]

Economic Relationship

Brexit will greatly affect trade and foreign direct investment in the Republic of Ireland. In the short term, the Irish economy will be hurt by the volatility of Great Britain’s market. In particular, the alarming eleven point one percent drop in sterling that immediately followed the Brexit decision has hit Irish exporters.[33] The sharp fall caused Irish exports to the UK, specifically meat and dairy products, to become fifteen percent less competitive in their respective markets.[34] Director of the Irish Business and Employers Confederation (IBEC), Fergal O’Brien, commented on the extent of the economic hit to the Republic: “The Brexit strain is manifest and intense. Without urgent action to address competitive pressures, hundreds of millions of euros worth of exports and thousands of jobs will be lost.”[35] IBEC analysis of historical trade between Great Britain and Ireland showed that a one percent weakness in sterling results in a point seven percent drop in the value of Irish exports. If the pound fell to £0.90 to the Euro, that would cost Ireland $880 million ($USD) in food exports and 7,500 jobs in that sector alone.[36] A study done by the Economic and Social Research Institute estimates that Brexit will significantly impact bilateral trade flows between Ireland and the U.K by twenty percent or more.[37] This figure will differ greatly across commercial sectors and products; agriculture, food and beverages, and basic metals industries most impacted given their dependence on British imports.

On a positive note for Ireland, Great Britain will become less attractive to foreign direct investment (FDI) because of the uncertainty surrounding the future of its economy, along with the reduced access to the EU single market. This may be counterbalanced by an increase in FDI in the Republic of Ireland, especially given Ireland’s low corporate tax rate (twelve point five percent), English-speaking labour force, and EU membership. Some FDI in Great Britain could also choose to relocate to Ireland for the same reasons. Already a leading city in technology, Dublin appears to be becoming the new hub for financial firms’ European Headquarters. Since the Brexit vote, areas within the financial industry including banking, insurance, and funds are in talks and negotiations with IDA Ireland, the agency responsible for the attraction and development of foreign direct investment in Ireland.[38] Despite some initially ominous statistics, Ireland is in a good position to shield itself from potentially destructive effects of Brexit, maintaining the fastest-growing economy in Europe despite Brexit’s slowing of its annual GDP growth.[39]

Peace Process

On April 10, 1998, representatives from the Irish and British governments and Northern Irish political parties co-signed the Good Friday Agreement.[40] This agreement brought an end to over thirty years of sectarian conflict in Northern Ireland, the period known as The Troubles. The agreement set up the Northern Ireland Assembly, a power-sharing executive that linked Northern Ireland to assemblies in both Dublin and London. The Northern Ireland Assembly sits in the Parliament Buildings at Stormont Castle and is the center of governmental power in the North. Northern Irish residents voted seventy one point tweve percent in favor of a referendum supporting the agreement.[41] The peace process has not been without problems since the signing of the Good Friday Agreement; disagreements over controversial issues such as Orange Order marches, policing, and decommissioning of paramilitary groups continue to this day. However, what once seemed impossible, given the polar opposite political alignment of Northern political parties, was achieved under the Good Friday Agreement, a testament to how far Northern Ireland had come since the dark and violent era of The Troubles.

Today, the Northern Ireland Assembly is led by First Minister Arlene Foster of the Democratic Unionist Party (DUP), seconded by Deputy First Minister Martin McGuiness from Sinn Féin.[42] Following the Brexit decision, Foster and McGuiness wrote to Prime Minister May declaring their expectation of being fully included in negotiations regarding the UK’s future relationship with the EU. In this letter, they stressed that “the border cannot become a catalyst for illegal activity or create an incentive for those who wish to undermine the peace process.”[43] Newly appointed Northern Ireland Secretary James Brokenshire echoed these sentiments, saying he wants to chart “a positive new future for Northern Ireland.”[44] Taoiseach Enda Kenny emphasized the importance of the relationship between the Northern Ireland Assembly and the governments of Ireland and Great Britain:

“We [PM May and Taoiseach Kenny] did repeat and reiterate the importance of the partnership between our two governments as co-guarantors of the Good Friday Agreement, in supporting the peace process, and in contributing to stability and continued progress in Northern Ireland. We are both very much committed to the 1998 Good Friday Agreement… and we will continue to work for a prosperous and peaceful Northern Ireland in the time ahead.”[45]

Neither Northern Ireland nor the Republic wants to see a return to pre-Good Friday Agreement political violence, given the significant progress both countries have made since then. It is imperative that the border situation be a top priority for the British government in post-Brexit negotiations.

Northern Ireland Reaction

A majority (fifty five point eight percent) of Northern Ireland residents voted to remain within the European Union. Now, after the referendum has declared an exit from the EU, many have asked Prime Minister Theresa May to address the issues of Northern Ireland and the peace process before initiating Article 50. Northern Ireland has a fraught, complicated, and violent history with the Republic of Ireland. The membership of both Ireland and Great Britain within the European Union was a cornerstone of the 1998 Good Friday Agreement, symbolizing the unity of the two nations in mitigating continued political violence at the time.[46] The North-South relationship has changed considerably since the 1970s but feelings about a potentially united Ireland seem to have remained strong following the Brexit decision.

In a survey conducted in September 2016, support for a United Ireland increased, with twenty two percent supporting an all-Ireland approach, up from seventeen percent just three years earlier.[47] Although the survey was conducted amongst a small sample group (1000 people), it revealed some interesting perspectives: nearly half of Catholics supported the idea of a united Ireland, while barely a quarter of Protestants do. In addition, fifty two percent of those interviewed supported the idea of the government calling a border poll within the North.[48] Those warming up to the idea of a united Ireland may be thinking economically, knowing that a thirty-two county Ireland would see a big economic advantage for the North while also modestly benefitting the South.[49] At the moment of writing, it is still not clear whether a united Ireland could ever become a reality, but the idea is definitely making headlines and news stories in both the UK and in Ireland.

In contrast to a united Ireland, the idea of an independent Northern Ireland has also been publicly debated since the Brexit result. Across the Irish Sea, Northern Ireland’s neighbor, Scotland, held a referendum for independence in 2014. In response to the question “should Scotland be an independent country?” fifty five point three percent of Scots voted “No” and forty four point seven percent voted “Yes”, with eighty four point five nine percent voter turnout.[50] Scottish independence is a likely outcome after the Brexit vote; but for Northern Ireland, such a fate is much more unlikely. Scotland and Northern Ireland are both small, geographically and by population, but the former could be much more economically viable by itself compared to the latter. That being said, a report has emerged with another political possibility. The report outlines a hypothetical “voluntary union” between England and Wales, Northern Ireland, and Scotland. This proposed union would see a fully developed government in each country, allowing each parliament to have full sovereignty over its own affairs.[51] In this model, there would be an option to voluntarily sign up for “shared UK functions which would include the monarchy as head of state, foreign affairs, defense, national security, immigration…and the civil service.” Countries would have the option to opt in or out of these areas.[52] This proposed independent model is highly unlikely, but nevertheless is interesting to consider.

Border

It is not possible to talk about the effect of Brexit on Northern Ireland without mentioning the possible effects that implementing a border would have on the six Northern Irish counties. A hard border would be the biggest threat to peace between the North and South, an eerie reminder of the military checkpoints that dotted the border during the violent decades of The Troubles. As of right now, residents on either side of the border can freely travel between both countries. In fact, there are a lot of people who live on one side of the border and work on the other, relying heavily on the Common Travel Area: the free movement between the two countries, something that will most likely not survive after Brexit negotiations. Immigration was a key issue of the June 23rd referendum, and directly affects the question of a hard border. Britain wants to be able to control its borders, especially given the recent rise in refugees in Europe. If Great Britain chooses to tighten up its borders on the mainland, then, unfortunately, the same applies to the border on the island of Ireland. At this time, no one is quite sure what the border will look like, whether it will be traffic stops, fences, or checkpoints, not to mention what will happen when the border crosses people’s houses, farms, and land. If a hard border does get implemented, it will mean big problems for Northern Ireland; if it does not, then it means big problems for Great Britain, as it would provide an easy path for refugees and migrants within the EU to get into Great Britain.

Economic Effects

Staying within the United Kingdom was once a sign of guaranteed stability and prosperity, but now certain communities, including Northern Ireland, fear the economic uncertainty of leaving the EU. Despite holding only three percent of the British population, Northern Ireland will be the region most economically affected by Brexit. Northern Ireland is a relatively poor province that relies heavily on its membership in the European Union for financial resources. For Northern Ireland, leaving the EU means leaving behind the financial support the union has provided since peace settlements. Without those funds, there is danger of a return to low-intensity violence within Northern Ireland and across the border. Northern Ireland receives significant economic support from the European Union that has allowed the province to flourish and thrive. The tourist industry is now worth £723 million ($895 million), the IT industry is growing, and there are plans to bring corporate tax rates down to twelve point five percent, in line with the tax rate in the Republic.[53] Northern Ireland received £2.5 billion ($3.1 billion) in the last EU funding round, with a further £2 billion ($2.47 billion) promised before 2020.[54] Furthermore, the EU has rolled out peace programs, cross border business development, subsidies for agriculture and fishing, and rural development programs in the North. Even the most recent creation of new infrastructure and improvement of existing structures in the North are thanks to monetary support from the European Union. If financial support is taken away, what will happen to the maintenance of these structures? A large portion of employment in Northern Ireland is linked to industries that have major trade agreements within the European Union and thus will be heavily affected once Great Britain leaves.[55] Ulster Bank, Northern Ireland’s largest bank, claimed that the uncertainty that surrounds the Brexit negotiations would heavily impact foreign direct investment in the North.[56] Northern Ireland may have to cut back on government spending and eliminate jobs, leading to high unemployment and consequently low economic growth in the area.

Scotland

An interesting actor in the Brexit fallout is Scotland. The 1707 Act of Union brought together the Kingdom of England and the Kingdom of Scotland, which had been separate states with separate legislatures but the same monarch, as “united into one kingdom by the name of Great Britain.”[57] Since then, the two countries have shared plenty of similarities, such as royalty and religion, but they also have their differences, both culturally and historically. It wasn’t until the 20th century that Scottish political parties started to advocate for home rule, what later became known as the Scottish devolution, whereby the UK parliament would give power to a Scottish parliament. The Scots National League, which later became the Scottish National Party, was formed in 1924 with the goal of obtaining Scottish independence. There were small political organizations that campaigned for independence throughout the 1940s and 50s, but no political party saw large electoral success until the Scottish National Party took a number of parliamentary seats in the 1960s. A proposal for a devolved Scottish Assembly was held through a Scotland-wide referendum in 1979. The referendum failed because a clause was inserted into the legislation requiring more than 40 percent of all eligible voters to agree to devolution before it took place.[58] The next constitutional reform took place in 1997, when a second devolution referendum was held. This referendum was successful and passed the Scotland Act 1998, which set up the Scottish parliament with power to legislate certain outlined matters within Scotland.[59] In 2011, the Scottish National Party (SNP) emphasized its commitment to hold a referendum on Scottish independence during the 2011 parliamentary election cycle. After winning the majority of seats, the SNP followed through on its promise and held a referendum in 2014 asking, “Should Scotland be an independent country?” Before the vote, the Scottish government published a 670-page white paper titled Scotland’s Future, which outlined the case for independence and the means by which Scotland would become an independent country.[60] The white paper addressed social policies with a large emphasis on childcare, as well as considering the pension system and minimum wage, among other topics. In the end, Scotland voted against becoming an independent country by fifty five point three percent to forty five point seven percent.[61] When Prime Minister Cameron announced his intention to hold a referendum on Great Britain’s membership within the EU, Scottish political parties again broached the subject of Scottish independence.

Despite the overall British vote to leave the European Union, an overwhelming majority of Scots voted to remain in the Union; sixty two percent voted in favor of remaining, with thirty eight percent voting to leave.[62] Scotland’s first minister, Nicola Sturgeon, said that it was “democratically unacceptable that Scotland face the prospect of being taken out of the EU against its will.”[63] Immediately after the vote, Sturgeon said that the Scottish government would begin preparing legislation to enable another vote on Scottish independence. Great Britain’s negotiations with the European Union could result in a hard exit, whereby they leave the single market, end free movement, and reintroduce customs borders. The Scottish government is confident that, if this is the outcome of negotiations, it will only strengthen the support for Scottish independence. Although independence is what factions of Scotland ultimately desires the idea would raise questions about its border to England, a similar problem that Northern Ireland is about to encounter. There would have to be discussions around what a hard border between Scotland and England would look like, what the travel area would look like, and whether a strict border would have far-reaching effects on Scotland’s relationship with England. Brexit has caused Scots to identify more as Scottish than British and has increased the emphasis that Scotland places on its relationship with Europe. In this way, Scots embrace their European-ness in an attempt to distinguish themselves from their xenophobic and anti-Europe neighbors to the South. In her first speech after the vote, First Minister Sturgeon outlined the Scottish priorities, announcing, “I intend to take all possible steps and explore all possible options to give effect to how people in Scotland voted —in other words to secure our continuing place in the EU, and in the single market in particular.”[64] Scotland relies heavily on the European Union for trade and business ties, hence Sturgeon’s emphasis on maintaining the single market. Economically, Brexit came at a less than ideal time for Scotland. They are currently facing low levels of oil and gas and have recently seen a slowdown of their economic growth. As the Brexit negotiations move forward, it will become increasingly clear whether Scotland will get any, some, or none of the protections it seeks from this Brexit situation.

Larger Consequences for the European Union

Great Britain is the first country to vote to leave the European Union since its inception. As a result, some people fear that Brexit may have a domino effect around Europe, causing other countries to also try and secede. Brexit will impact EU member states in a variety of ways, some more severely than others depending on their connectivity with Great Britain. Three countries stand out for the likely heavy impact Brexit will have on them: most obviously Ireland, but also the Netherlands and Cyprus. The Netherlands, Cyprus, and Ireland share very strong trade, investment, and financial links with Great Britain and are closely aligned in terms of regulatory and trade policies.[65] The Netherlands’ political landscape is vulnerable to the consequences of Brexit. Right-wing parties have been garnering support around Europe and the Netherlands is no exception, where the fastest-growing party is the Partij voor de Vrijheid (Party for Freedom, PVV), a nationalist, right-winged, populist party. The party is consistently Eurosceptic and focuses on issues like immigration, seeking to halt immigration from the east and taking a strong assimilationist stance on the integration of immigrants into Dutch society.[66] PVV has been advocating for withdrawal from the European Union, a current topic in the ongoing political elections. Similarly in Denmark the Dansk Foleparti, the Danish People’s Party (DPP) has gathered support on a nativist, anti-immigrant, far-right political platform. The DPP won twenty one percent of the vote in the 2015 general election, showing the increase in anti-right mindsets across Europe. France is also no exception to the rise of right-winged parties. The French Presidential election is due to be held in late April or early May, and right wing party leader Marine Le Pen is in the running to win it. Le Pen is the president of La Front National, the National Front (FN), a national-conservative political party in France that opposes mass immigration and is outwardly anti-Europe. Although the concept of leaving the European Union is a hot topic across the continent right now, many countries will likely wait to see the outcome for Great Britain before committing themselves to the same course.

Conclusion

Great Britain’s decision to leave the European Union may be one of the most important decisions of 2016. This move is the first of its kind and while many countries may disagree with the final outcome, they will have to find a way to cope with the political and economic fallout. Long-term effects are still unknown and will be for years but some short-term consequences have become apparent since the June vote. Great Britain’s economy faltered when the value of the pound declined sharply in the hours and days after the vote. There was an increase in race hate crimes across Great Britain, given the strong position Vote Leave took on immigration. Fellow European countries were also reacted putting a quick halt to the UK’s presidency of the council of the European Union that they due to take up in July 2017. The longer-term effects on the British economy or Brexit’s impact on immigration will not come to fruition until Prime Minister May triggers Article 50. Northern Ireland and the Republic of Ireland will be affected most by Great Britain’s departure from the European Union. The history between these two countries will play a big part in negotiations with Great Britain. The biggest implication is the decision regarding the border between the North and the South. Neither the Irish government nor the Northern Irish Assembly want to see a return to borders of the past, something that would remind both countries of the violence and terrorism they have since overcome. However if no hard border is implemented then Great Britain may suffer from a migrant crisis, something Vote Leave campaigned to end. Economically, Great Britain and the Republic of Ireland are woven together, being each other’s biggest trading partners. Brexit comes at an inopportune moment for Ireland as the country has successfully recovered from the global economic recession. However, for Ireland, there may be an economic silver lining to Brexit. Foreign direct investment may choose to relocate to Ireland because of its talented, English-speaking labor force, low corporate tax rate, and increasingly vibrant capital city. Northern Ireland will also suffer economically after Great Britain leaves the European Union. The small country of less than two million people will have to find a way to fill the void of financial support that the EU provides. At the same time Northern Ireland may be the next European country to have an influx of migrants if no hard border is put in place between it and the Republic.

At the time of writing, the economic and political implications of Brexit for the island of Ireland are not entirely clear. What is clear is that the next couple years will be an interesting, formative, and transitional period for Ireland, Northern Ireland, Great Britain, and Europe as a whole.

[1] “EU Referendum Results – BBC News,” BBC News, June 24, 2016.

[2] “Eight Reasons Leave Won the UK’s Referendum on the EU,” BBC News, June 24, 2016.

[3] Ibid.

[4] Eric Platt and Michael Mackenzie, “How Global Markets Are Reacting to UK’s Brexit Vote,”  Financial Times, June 24, 2016.

[5] “The History of the European Union,” European Union Website, accessed September 29, 2016.

[6] “What Is the EU, Why Was It Created and When Was It Formed?” Michael Wilkinson, The Telegraph, June 22, 2016.

[7] Sam Wilson, “Britain and the EU: A Long and Rocky Relationship,” BBC News, April 1, 2014.

[8] Heather Stewart, Rowena Mason, and Rajeev Syal, “David Cameron Resigns after UK Votes to Leave European Union,” The Guardian, June 24, 2016.

[9] “Theresa May’s Cabinet: Who’s in and Who’s Out?” BBC News – UK Politics, July 14, 2016.

[10] Ibid.

[11] Ibid.

[12] Ibid.

[13] “Article 50 TEU: Withdrawal of a Member State from the EU,” European Parliament, Europa, European Union Research Service, February 2016.

[14] Ibid.

[15] Jenny Gross, “U.K.’s Theresa May Pledges to Set EU Divorce in Motion by End of March,” WSJ, October 2, 2016.

[16] Stephen Castle and Steven Erlanger, “‘Brexit’ Will Require a Vote in Parliament, U.K. Court Rules,” The New York Times, November 3, 2016.

[17] Fred Lewsey, “Brexit: High Court Ruling on Article 50 Explained,” University of Cambridge, November 3, 2016.

[18] Anne Perkins, “High Court Brexit Ruling: What Does It All Mean?” The Guardian, November 3, 2016.

[19] Ibid.

[20] “Anglo-Irish Treaty 1921,” National Archives, December 6, 1921.

[21] Ibid.

[22] Ibid.

[23] The Republic of Ireland was known as the Irish Free State after the Anglo-Irish Treaty 1921.

[24] “History – The Troubles,” BBC History, November 24, 2016.

[25] Ibid.

[26] Taoiseach is the Irish word for Prime Minister.

[27] “PM and Taoiseach Enda Kenny Statements: 26 July 2016,” GOV.UK, Prime Minister’s Office, July 26, 2016.

[28] Ibid.

[29] Enda Kenny, “Statement by Taoiseach Enda Kenny on the UK Vote to Leave the European Union,” RTE News, June 24, 2016.

[30] Ibid.

[31] Denis Staunton, “Irish Unity Must Be Considered in Brexit Talks, Enda Kenny Says,” The Irish Times, September 9, 2016.

[32] “Enda Kenny: Work Being Done to Keep Border with Northern Ireland Open,” Irish Examiner, June 27, 2016.

[33] Platt, Mackenzie, “How Global Markets Are Reacting.”

[34] Lisa O’Carroll, “Irish Exporters Feel Chill from Brexit Fall in Sterling,” The Guardian, August 3, 2016.

[35] Ibid.

[36] Ibid.

[37] Alan Barrett, Scoping the Possible Economic Implications of Brexit on Ireland, Economic and Social Research Institute, November 2015.

[38] Reuters, “Ireland Moves Swiftly to Lure Financial Jobs from the UK After Brexit,” Fortune, July 27, 2016.

[39] Phillip Inman, “Irish Economy Surges 26% as Revised Figures Take in Foreign Investment,” The Guardian, July 12, 2016.

[40] “Good Friday Agreement,” BBC History,  accessed November 23, 2016.

[41] Ibid.

[42] “Executive Ministers,” The Northern Ireland Assembly, accessed November 23, 2016.

[43] “NI Leaders Seek Inclusion in Brexit Talks,” RTE.ie, August 11, 2016.

[44] “Northern Ireland Secretary Does Not Want Return of Hard Border,” RTE News, July 15, 2016.

[45] “PM and Taoiseach Enda Kenny Statements.”

[46] Welle.Deutsche, “United Ireland Back on the Agenda,” DW.COM, July 16, 2016.

[47] Amanda Ferguson. “Sharp Rise in Support for United Ireland, Survey Reveals,” The Irish Times, September 8, 2016.

[48] Ibid.

[49] Harry McGee, “Both Republic and North ‘could Benefit from United Ireland,'” The Irish Times, October 9, 2016.

[50] “Scottish Independence Referendum,”  GOV.UK, accessed November 22, 2016.

[51] James O’Shea, “Independent Northern Ireland Possible as Top Tories Talk Federal UK,” IrishCentral.com, July 11, 2016.

[52] Ibid.

[53] Kathryn Gaw, “Northern Ireland’s Greatest Fear from a Brexit Is the Return to Conflict,” The Guardian, June 21, 2016.

[54] Ibid.

[55] Paul Mac Flynn, “The Economic Implications of BREXIT for Northern Ireland,” Nevin Economic Research Institute, April 2016.

[56] Conor Humphries and Amanda Ferguson, “How Brexit Has Suddenly made the prospect of a United Ireland Thinkable,” The Independent, July 3, 2016.

[57] “Union with England Act 1707,” Legislation.gov.uk, Statute Law Database, National Archives, accessed December 4, 2016.

[58] BBC News, “EU Referendum Petition Signed by More than 2.5m,” BBC News, June 25, 2016.

[59] “Scottish Parliament Official Report – 12 May 1999,” Scottish Parliament, accessed December 4, 2016.

[60] “Scottish Independence: Referendum White Paper unveiled,” BBC News, November 26, 2013.

[61] “Scottish Independence Referendum – Results,” Scotland Decides, BBC News, Sept. 2014.

[62] BBC News, “EU Referendum Results – BBC News,” BBC News, June 2016.

[63] BBC News, “Brexit: Nicola Sturgeon Says Second Scottish Independence Vote ‘highly Likely,'” BBC News, June 24, 2016.

[64] Ibid.

[65] “Brexit: The Impact on the UK and the EU,” Global Counsel, June 2015.

[66] Ibid.

 

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