Brexit: David Frost on Theresa May's EU negotiations
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Without its free-trading, transatlantic partner Britain, Dublin has become “hopelessly exposed” in its battle to maintain its globalist approach in the coming years. Writing for the Politico website, Dr Eoin Drea, a senior research officer at the Wilfried Martens Centre for European Studies, said it was “shortsighted” to look at the main challenges of Brexit for Ireland as maintaining a frictionless border with Northern Ireland. “This is understandable, given the deep links between all the constituent parts of the British Isles. But it’s also shortsighted. Because the real danger to Ireland is the long-term implications of being a reluctant member of a deeper and more integrated EU,” he wrote.
Ireland operates as a low-tax economy attracting huge multinational firms to open their European hubs in cities like Dublin.
It has become a European base for US tech firms, with Facebook and Google opting to open their EU headquarters in the country.
Ireland’s corporation tax regime has been under threat from its EU neighbours for many years now, with the likes of France and Germany wanting Dublin to further bump up its uniform 12.5 percent of tax on all corporation profits.
But Dublin fears this will decimate Ireland’s appeal to mobile foreign direct investment that provides a significant boost for the country’s relatively small economy.
Dr Drea said: “Dublin is now a lonely outlier in an EU where its reliance on foreign multinationals (overwhelmingly from the US) will no longer be ignored.
“These companies now account for 32 percent of all jobs in Ireland and 49 percent of employment taxes. Remarkably, 75 percent of recent Foreign Direct Investment into Ireland either comes from the US.(58 percent) or the UK (17 percent). By contrast, just 5 percent comes from Germany.
“It’s little wonder that Ireland’s economic model has become the bête noire of EU policymaking.”
And the expert warned the Brussels project was changing – and not in Ireland’s favour – because of Brexit and the bloc’s shoddy response to the coronavirus pandemic.
He added: “Faced with the prospect of pure irrelevance, Brussels has bet the house on a bigger, more expensive and more centralised EU.
“COVID-19 has provided Brussels with the impetus to reach for a deepening that was long thought impossible.
“This has dramatically altered the internal dynamics of the EU and accelerated the shift towards a tighter grouping with joint borrowing, a common corporate tax system and a whole raft of additional EU-level taxes.
“Europe’s Recovery Fund is the union’s shining bauble; corporate tax is its harmonising totem.”
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Without opposition from Britain to the EU’s integrationist strategy, Ireland faces being dragged in.
It can no longer play the pro-Brussels capital while siding with London on areas of economic liberalism.
“Brexit has placed Dublin in an insurmountable bind,” argues Dr Drea.
“A further integrating EU will temper Ireland’s multinational-infused economic engine – and yet EU membership is vital for such international investment to continue in the first place.”
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And now maybe Ireland will pay the price for using the EU as “an exit from long-standing dependencies on Britain”.
Dr Drea concluded: “Brexit highlights the reality that, even after a century of independence, Britain remains indispensable to Ireland’s political stability.
“Ultimately, Ireland will have to choose between immersing itself even more fully in the EU or taking a more peripheral position in Brussels and prioritising existing arrangements across the British Isles.
“Soon, the space will no longer exist to do both.”
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