Worries of the possible consequences of a no-deal ending continues to cloud Ireland as Brexit talks hang on a thread,
But why is a no-agreement situation a nightmare for the Irish people? Well, experts predict extreme possible adverse effects on the nation’s businesses and the entire economy.
A no-deal exit will impact Ireland’s economy in four primary areas, including;
- Direct purchase
- Logistics & supply chain
Let’s find out how.
Irish import taxes too may go up if the British quits without a deal. Cereals and processed foodstuffs are some of the many items that may see a price hike
For example, Ireland sources up to 4,000 tonnes of flour from the United Kingdom each week, and levies on that may push the price of bread loaf by 15 cents.
A no-deal ending will also affect the raw materials that enter Ireland for processing before shipping to other nations as finished goods. This could cause a price hike in the resulting finished products reducing their competitiveness in the nations they go to.
And while the Irish would go around this by sourcing raw materials from other European Union members, this too may come at a price.
Ireland makes more than €13 billion in exports to the UK per year, which may be affected if discussions end in a stalemate— Britain could press import taxes worth up to €1.7 on Irish exports.
The Food & Agriculture sector would take the worst beating as 38 percent of exports from that industry go to the United Kingdom.
Again 50 percent of Irish cheddar cheese goes to Britain, which would mean levies on the upwards of 52 percent. Meanwhile, Irish beef exports to the British market would pay taxes to the tune of 74 percent.
Half of the cheddar cheese produced in Ireland, for example, goes to the UK, and a no-deal situation would attract tariffs up to 52%.
3. Logistics & Supply chain
Agreement or no agreement, the new customs regulations will hamper Ireland’s inflow and outflow of goods.
We’re looking at delays at UK Customs offices all over Europe, and in Ireland as officers confirm credentials.
The result: an interrupted supply chain, hiked costs, and slow (or late) deliveries. Such situations can affect the quality of perishable products like foods, medicine, etc.
That could end up being a big problem for perishable goods, such as certain foods and high-value pharmaceuticals.
4. Direct Customer Purchases
Irish shoppers purchasing directly from UK markets will suffer VAT and customs taxes in most product categories.
For instance, sporting gear or equipment costing €167 will hike to €226 after all levy is considered. Still, this may have the positive ripple effect of enticing people to purchase home-made goods more.
The Bottom line
Ireland faces all this trouble amid a global pandemic that has already caused a recession in many economies worldwide. Brexit is almost given, but a no-deal ending might threaten to shake Ireland’s economy in many ways.
Author Bio: Payment industry guru Taylor Cole is a passionate payments expert from bestpaymentproviders.co.uk who understands the complex world of merchant accounts. He also writes non-fiction, on subjects ranging from personal finance to stocks to cryptopay. He enjoys eating pie with ice-cream on his backyard porch, as should all right-thinking people.