Despite dire warnings of the consequences of Brexit for Irish exports, the UK remains the State’s largest market. In 2023 it accounted for 29 per cent of exports by indigenous Irish companies, with exports growing by six per cent to €9.97 billion.
It’s an excellent performance that has been achieved for a number of reasons, says Vassilios Papavassiliou, assistant professor of finance at UCD’s College of Business and a fellow at the UCD Geary Institute for Public Policy.
“First, the two economies are deeply integrated, both their wholesale and retail sectors, over generations, due to cultural and historical reasons, common-law legal system and common language,” he points out.
Moreover, the State’s export specialisation and the UK’s import specialisation “complement each other” in relation to their bilateral trade, while the entrenched supply chain linkages between the two countries have also contributed to growth in Irish exports.
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Part of the strong performance post-Brexit is down to the ability of exporters in the Republic to adapt well to the new challenges and business processes required to meet the new UK requirements, he says.
But there is also the fact that the full impact of Brexit has not yet been felt by Irish traders, due to delays in the implementation of inspections of food and drink imports by the UK.
At the end of January 2024 the UK introduced several customs, along with sanitary and phytosanitary requirements, on all imports into Britain from the EU, including Ireland. But further measures are due.
“These measures are mostly focused on food and animals and are expected to negatively impact Irish exports, with the agri-food sector being particularly at risk, as it is highly reliant on the UK market. Small and medium-sized enterprises will be mainly affected by the new trading arrangements as they have a significant presence in agri-food,” says Papavassiliou.
“With the objective of minimising the adverse impact on Irish GDP, Ireland must strive to diversify its export base, adopt new trade-promotion policies and reorganise its skills strategies to access new markets in Europe and elsewhere.”
He believes particular emphasis should be placed on supporting the agri-food and traditional manufacturing sectors that are the most exposed to disruptions to trade between the State and the UK.
“Moreover, Ireland must re-evaluate opportunities within the broader financial sector and, in particular, foreign direct investments, towards the fintech industry, as well as pharmaceuticals, chemicals and digital technologies, in which it already has a competitive advantage,” he adds.
Though Brexit has fallen from the headlines, “it hasn’t gone away”, agrees Conor Mulvihill, director of Dairy Industry Ireland, the representative body for Ireland’s primary and secondary dairy processors.
More than half of the Republic’s meat, and a third of its dairy, goes to the UK. “It always will. I don’t envisage a day that the UK will not be our biggest market. So therefore, the outworkings of Brexit are still absolutely fundamental to us,” says Mulvihill.
The dairy sector is one of the largest indigenous contributors to the State’s economy, accounting for €17.6 billion of output in 2022. In the decade since milk quotas were lifted milk production has grown from around five billion to 8.5 billion litres a year.
“Ireland now produces more dairy per capita than any other country in the EU, by a mile, and is second in the world after New Zealand in terms of the amount of litres produced per head and dairy exports have now gone up from about €3.5 billion pre-quota to now €7 billion,” says Mulvihill.
The agreement of the Windsor Framework has been a boon. Though there are some restrictions in relation to east-west trade, “so far, while it has been an administrative burden mostly for companies, we have shielded our farmers from any discernible aspects of Brexit,” he says.
Indeed, the main discernible impact has been the development of a thriving cheese industry.
“We have retained the amount of cheddar we’ve sold and actually increased our cheddar markets outside of the UK, while the extra milk has been focused on different types of cheeses for global tastes, like mozzarella, Gouda and Edam,” he explains.
He credits what he calls the “whole-of-industry – and whole-of-government – approach that was taken” as having been “hugely successful”.
Next year, once the new EU commission has fully bedded in, trade negotiations will begin again with the UK’s new Labour government. The hope is that the sanitary and phytosanitary barriers still set to emerge can be “ameliorated and mitigated” says Mulvihill.
“I think every single food trade association on the island of Ireland would very much encourage that.”
