Irish Economy Likely To Falter In Wake Of Brexit

Jul 8, 2016
Originally published on July 11, 2016 2:14 pm
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ARI SHAPIRO, HOST:

When it comes to the Brexit vote, you could call Ireland an innocent bystander. The United Kingdom's vote to leave the European Union is certain to damage Ireland's economy. The U.K. is Ireland's biggest single trading partner, and Ireland's tourism business relies heavily on British visitors. NPR's Frank Langfitt reports from Dublin.

FRANK LANGFITT, BYLINE: The view of Brexit from Wynn's Hotel in downtown Dublin is fairly bleak.

RORY BYRNE: It's going to hurt us.

LANGFITT: Rory Byrne is assistant manager here. He says the recent plunge in the value of the British pound after the Brexit vote has already made Irish vacations about 10 percent more expensive for tourists from the U.K.

BYRNE: Thirty-five, 40 percent of our business comes from the U.K. market. So obviously with sterling not as strong, people don't have as much money, and it's going to affect us massively. It's not just hotels. You're looking at bars, restaurants, shops anything to do with tourism is about to take a hit here.

LANGFITT: Byrne says if the British currency remains low, it could shave 20 percent off his revenue, and he hasn't figured out how to replace that.

BYRNE: I think we're all in such shock that they actually voted to leave, that nobody actually had much foresight into this. It's just - flabbergasted.

IAN TALBOT: People are very concerned. If they're about to sign a contract, they're stopping. They're not signing that contract.

BYRNE: Ian Talbot runs Chambers Ireland, an umbrella group for chambers of commerce across the island. He says the drop in the British pound already has Irish businesses rethinking deals with U.K. companies.

TALBOT: Because they've got to go back to their accountants and, say, OK, if we're going to get 10 percent less revenue, are we going to make any money?

LANGFITT: Along the Liffey River in Dublin's financial district, some see a silver lining. Martin Davies is eating burritos in a food court with some co-workers.

MARTIN DAVIES: People are talking about if the Irish government can handle this well, they can actually bring a lot of the business to Dublin and make it benefit Ireland, too.

LANGFITT: What kind of business would they be looking at and where?

DAVIES: From London because Dublin is the $3.8 trillion industry for hedge funds, which is one of the biggest in the world.

LANGFITT: Davies is an auditor from London who's working here in Dublin. When the U.K. splits from the European Union, companies in the city of London, one of the world's top financial capitals, will no longer be able to do certain kinds of business on the continent.

DAVIES: It's got to go somewhere in the E.U. Frankfurt's another place. Brussels is another place, but Dublin already has such a big hedge fund industry that it almost makes sense just to bring it over here.

LANGFITT: Davies takes no glee in this, nor does his fellow auditor and lunch buddy, Niall McEvoy.

NIALL MCEVOY: There are some opportunities, but I think predominantly it's a lot of worry, particularly here in Ireland because we're just, like - almost all the industries in Ireland - we're so reliant on the U.K. for everything.

TALBOT: Our trade between Ireland and the United Kingdom is about 1 billion pounds sterling a week.

LANGFITT: Again, this is Ian Talbot of Chambers Ireland. And that figure at today's exchange rates translates into roughly $1.3 billion. Talbot says the U.K. and Ireland have a lot of mutual interests, so he thinks the European Union and the U.K. will negotiate some sort of Brexit deal that doesn't damage the economies of other EU members like Ireland.

TALBOT: Ultimately, you have to be optimistic, and you have to be optimistic that common sense will prevail, and there's a reasonable solution will be found to make sure that both the U.K. and the rest of Europe can continue to thrive and grow.

LANGFITT: Talbot says creating economic strife and clear winners and losers in a post-Brexit Europe is in no one's long-term interest. Frank Langfitt, NPR News, Dublin. Transcript provided by NPR, Copyright NPR.