Economist warns of Brexit 'distraction' as cost of Ulster fry hits lowest level in… A Brexit could become a “distraction” from the real issues facing…
By Rachel Martin
An Ulster fry
A Brexit could become a “distraction” from the real issues facing the UK economy, a leading economist has warned.
While Ulster Bank has not taken an official stance on the issue, its chief economist Richard Ramsey said he was sceptical of claims Northern Ireland would benefit financially from the UK leaving the EU.
Speaking at the bank’s annual agriculture briefing, Mr Ramsey also warned that a Brexit could prevent politicians from addressing the economic deficit.
“If nothing else, Brexit is a huge distraction,” he added. “If you think of the whole machinery of government, if there was to be a Brexit over the next five years, instead of tackling the NHS or getting public finances in order, they’ll be diverted to negotiating out of the EU and working out what happens thereafter. Some legal experts reckon that could take up to 10 years.”
Mr Ramsey also claimed Northern Ireland was “exposed more than the rest of the UK to developments in the EU”.
And he claimed that the looming referendum was creating “additional uncertainty” for agriculture, with the sector already hit hard by falling milk prices.
The latest figures from the Department of Agriculture and Rural Development showed a price per litre of 18.54p in February – down 4.13p over the year.
“The oversupply of commodities has also been depressing milk prices, and throughout 2015 exchange rates had not been working in the sector’s favour,” Mr Ramsey said.
“However, that has reversed in the first quarter of this year as sterling has experienced its sharpest fall against its main currency peers since 2007.
“If there is one thing that the agriculture sector in Northern Ireland has shown consistently over the years, it is resilience, and it will need that quality again as it plans for the future.”
Mr Ramsey told how 60% of Northern Ireland’s exports were sent to the EU, and predominantly the Republic of Ireland.
And while Scotland was one of the most pro-EU UK nations, “in export terms it’s one of the least exposed”.
Mr Ramsey added that the UK economy was in a vulnerable situation and any negative economic shocks would hit hard.
He warned it was unlikely the UK could negotiate trade deals in the two years allocated and said that this had never been done before.
Member states would not be obligated to strike a deal with the UK and could be prone to fear that it would encourage the others to also leave.
Mr Ramsey said he expected the result of the referendum would be less clear-cut than the last UK referendum in 1975 – and that continued EU dissension could cause economic uncertainty to rumble on for decades to come.
The economist also warned that an export levy of up to 20% could potentially apply between Northern Ireland and the Republic of Ireland, should the UK leave the EU.
The figure sits in line with the World Trade Organisation export levy and would apply if an alternative agreement was not put in place.
The Republic of Ireland is Northern Ireland’s biggest trading partner across all sectors including food, accounting for 33% of all exports and a total value of £2.11bn.
However, trade with the Republic has dropped by 8.1% in the past year, down £185m.
Northern Ireland’s exports to the EU as whole fell by 4.6% last year, to £3.46bn.
Mr Ramsey used his Ulster Fry Index as a tool to highlight the benefits of deflation for consumers.
He claimed the cost of the dish was at its lowest in seven years and had dropped by 8.5% year-on-year.