Brexit: Insider discusses UK state aid rules

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Dr Eoin Drea, a senior research officer at the Wilfried Martens Centre for European Studies, said that without its free-trading transatlantic partner Britain, Ireland has become “hopelessly exposed” in its battle to maintain its globalist approach. The expert warned it was “shortsighted” to look at the main challenges of Brexit for Ireland as maintaining a frictionless border with Northern Ireland. He added: “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.”

Ireland’s corporation tax system has been under threat from EU member states over recent years, with the likes of France and Germany pressing Dublin to increase its uniform 12.5 percent of tax on all corporation profits.

But Ireland is worried this will heavily dent the country appeal to mobile foreign direct investment that provides a significant boost for its relatively small economy.

Writing for the Politico website, 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.”

But Brexiteers have shown little sympathy towards Ireland, launching a furious attack against the country over its actions during the UK’s departure from the EU.

Reacting to our initial story, one person said: “Well I have no sympathy for them. They did everything possible to frustrate us leaving the EU.

“Now the chickens have come home to roost.”

A second reader commented: “Ireland isolated itself by its anti UK rhetoric and sticking with the EU.

“It’s self harm.”

Another person wrote: “The Irish have nothing to moan about on this one.

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“The EU have always made it abundantly clear that tax harmonisation will be part of their plans to implement a full fiscal union for the EU along with their debt union.

“Since Brexit not our problem however.”

A fourth reader added: “Tough luck Ireland because we don’t care. You have stabbed us in the back too many times.”

Dr Drea also warned the EU project is changing due to Brexit – and not in Ireland’s favour – because of the bloc’s much-criticised response to the coronavirus pandemic.

He said: “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.”

The expert added: “Brexit has placed Dublin in an insurmountable bind.

“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.

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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