Dan O’Brien: ‘After a major shift in May’s position on Brexit, there’s still everything to play for as Merkel comes to town’


Dan O’Brien: ‘After a major shift in May’s position on Brexit, there’s still everything to play for as Merkel comes to town’

Visit: German Chancellor Angela Merkel with pupils at the Thomas-Mann High School as part of the Europe-Project Day in Berlin, Germany, this week. Photo: Reuters
Visit: German Chancellor Angela Merkel with pupils at the Thomas-Mann High School as part of the Europe-Project Day in Berlin, Germany, this week. Photo: Reuters

Angela Merkel visits Dublin today. The German chancellor’s trip was announced only days ago. The most powerful leader in democratic Europe does not take time out of her schedule to visit small countries on a whim. She will discuss Brexit and Border issues with the Taoiseach.

The Taoiseach talked about these same issues with Europe’s second most powerful leader two days ago. Leo Varadkar went to Paris on Tuesday to meet his French counterpart. Emmanuel Macron said France would never abandon Ireland.

Both leaders have backed the Taoiseach to the hilt on Brexit and the Border backstop. Neither France nor Germany, publicly or privately, has ever seriously pondered throwing Ireland under the bus on the issue that has broken British politics.

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But all relationships involve give as well as take. Ms Merkel is here to make clear that she expects Ireland to fulfil its obligations to Germany and the rest of the EU in the event of a no-deal Brexit.

With extensive direct shipping routes between Ireland and France, and French farmers hyper-alert to the risks of cheap food leaking into the EU market via Northern Ireland, Mr Macron has an even greater interest in Ireland meeting those obligations.

It has always been clear, as this column has repeatedly set out, that if the UK leaves the EU without agreed terms, Ireland will be obliged to collect import taxes on goods coming from Northern Ireland and to ensure that those same goods meet EU laws and standards.

The European Commission in Brussels polices EU rules. At this 11th hour in the Brexit fiasco, the Government and Brussels are in intensive talks about how Ireland would fulfil these obligations.

This week Michel Barnier, the man whom EU leaders tasked with negotiating Brexit, said such checks were needed “in order to avoid any kind of controls inside the single market”. This was a not-so-subtle highlighting by the Frenchman of the choice Ireland would face in the event of a no deal: fulfil its EU obligations on goods coming into the Republic from Northern Ireland or face barriers to goods going from this island to continental Europe.

The Government continues to be less than clear on how it is facing up to this choice. Brussels has been upping the ante over the past week by talking of an ever greater risk of a no-deal Brexit.

Thankfully, and despite Brussels’s public assessment of the likelihood of a no-deal Brexit, the risk of the worst happening has declined again over the past week, even if it is still worryingly high.

For the first time since January 2017, when the British prime minister declared she was seeking a hard Brexit, Theresa May has made a substantive change to her position. On Tuesday evening, after spending a full working day locked in a meeting with her cabinet, she effectively dissolved her hard Brexit red lines.

Instead of trying to achieve what she had sought for so long with her own party, she announced that she would attempt to reach a cross-party consensus and then take direction from the House of Commons (she had previously refused to be bound by parliament’s mere ‘indicative’ votes).

This is a major shift. But it by no means eliminates the risk of a no-deal exit. There remain a dizzying number of issues to be resolved before that happens.

The biggest questions now are for Jeremy Corbyn, the leader of the opposition Labour Party and a life-long hard leftist.

He has always believed the EU to be a capitalists’ club. Its free market mechanisms – the customs union and the single market – have never held any appeal to him. According to the Corbynista worldview, free markets generate bad things for the least well-off, including insecurity and inequality. EU rules limiting governments’ freedom to control the commanding heights of the economy are another reason to seek to be free of its constraints.

Ideology is one reason Corbyn’s Labour Party is less than enthusiastic about the EU and all its works. Expediency and opportunity are others. Why should a party that has been sidelined on even this most crucial of matters help save Mrs May’s floundering government? Why would a party that has been out of office for a decade risk sharing the blame for the Brexit fiasco? Could Mr Corbyn resist bringing the government down and precipitating an election he could well win if the opportunity arose in the coming days?

It has become clichéd to say that there are more twists and turns to come in the tortured saga of Brexit. That remains as true as ever, even at this very late hour.

Let’s conclude with the positive news on the economy in recent days, and how limited the fallout from Brexit has been for people’s lives and livelihoods.

Usually, a cocktail of economic and political uncertainty gives consumers the jitters. That makes them salt more cash away and splash out less. Less spending and more saving cause economies to slow in the short run.

Uncertainty of the kind currently being experienced tends to spook businesses even more than individuals. When companies see potentially big changes to their trading environment just over the horizon, they invest less in new capacity and hire fewer workers.

Both these effects have been evident in Ireland for some time. But the good news is that weaker consumer and business confidence has come nowhere close to halting the economy’s overall momentum.

Even better news is that despite Brexit dominating more and more public and private conversations, the effects on behaviour (as opposed to sentiment) have been limited.

Late last week new figures showed that spending by consumers grew in February. Last Tuesday’s figures on the Government’s finances showed no sign of a slowdown in the rate at which revenues are flowing into Exchequer coffers in the first three months of the year. Earlier the same day, the State’s statisticians estimated that unemployment in March had fallen to its lowest level in 11 years.

If Brexit risks can be avoided, things look quite rosy for the Irish economy.

Irish Independent


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