The UK will remain the dominant export destination for Irish businesses despite Brexit and despite the increasing proportion of Irish exports going to the US, former European Investment Bank vice-president Andrew McDowell has said.
There are far more jobs here dependent on exports to the UK than on exports to the US, he told a webinar event hosted by consultancy firm PwC to mark its annual business leaders' survey.
“And that will remain the case for two very simple reasons. It’s a big economy and it’s close,” Mr Dowell said.
Despite technology and the removal of trade restrictions across the world, studies show geographical proximity and economic size are still the dominant factors in trade patterns, even in services, he said.
“In Ireland’s case, this is reinforced by long-standing historical ties and a shared language,” Mr McDowell said.
The PwC survey found that most business leaders here still believe the UK is crucial to Ireland’s future growth prospects, while almost half (46 per cent) still see the UK as their most important trading partner.
Mr McDowell, who joined PwC’s senior advisory team last year, said despite the relief surrounding the last-minute Brexit deal, there may now be “a dawning realisation that the agreement was not a silver bullet and that things are not going to be like they used to be”.
Recent tensions around the Northern Ireland protocol “highlight a serious lack of trust in the relationship and the negotiations, and also, worryingly for Ireland, that Northern Ireland is still the Achilles heel of the EU-UK relationship,” he said.
“It’s still an open question as to whether there is the political will to make this rather complex [Northern Ireland] arrangement work,” Mr McDowell said.
The real determinant of whether Irish exports to the UK will grow depends on what “the UK does for itself” in terms of industrial policy, innovation, regional growth and decarbonisation – which is unclear at this stage, he said.
The UK on Thursday postponed implementing post-Brexit checks on food coming from the EU for another six months, a move that was welcomed by exporters here.
Covid impact
Feargal O’Rourke, managing partner at PwC Ireland, said at the event that although Covid had decimated some industries – restaurants, hospitality and leisure – some had prospered by adapting their business models.
He predicted the gradual easing of restrictions and the rollout of vaccines would coincide with a huge boom in individual travel, but said business travel would not rebound to pre-Covid levels as businesses realised the benefits of digital communications and made their operations more sustainable.
The PwC survey found Irish business leaders were considerably more optimistic about the future than they were a year ago, despite Covid.
Some 82 per cent of leaders forecast revenue growth for their companies over the next 12 months, compared with 67 per cent a year ago.
The renewed confidence is fuelling expectations that hiring will resume, with 58 per cent of companies expecting to increase headcount over the next year.
Business leaders are more cautious about the prospects for the Irish economy, however, with 49 per cent expecting growth, up from 33 per cent in 2020.
Just 20 per cent of Irish chief executives foresee a global economic decline, compared with 62 per cent a year ago, when the pandemic was taking hold in Europe.
Perhaps unsurprisingly, pandemics and other health crises have emerged as the biggest perceived threat to growth prospects, with cyber threats in second place. Concerns over misinformation have almost doubled over the past year, with 71 per cent expressing worry over its impact.