Brexit: analysis of the socio-economic impact on the future of UK-Ireland relations

Abstract

This paper discusses the outcomes of the debate over the status of the Irish border during negotiations for the United Kingdom’s withdrawal from the European Union (“Brexit”), aiming to measure its socioeconomic impact after the creation of a new external border. To this end, we collect and compare data on the trade of goods and services between the UK and the Republic of Ireland, foreign direct investment (FDI), gross domestic product growth, and unemployment rates for the 2016-2019 period, during which London and Brussels negotiated the Withdrawal Agreement. Special attention is given to the North-South interaction in the island of Ireland since its border was one of the most problematic issues when the new UK-EU trade deal was being crafted. Although the exact long-term implications were not completely clear in the chosen period for this analysis, the evidence found suggests that the FDI in the UK is the most negatively impacted indicator, due to the relevance of the presence of EU investors in the country before Brexit, while other variables have shown nearly no relevant fluctuations to support the hypothesis that a change on the Irish border’s status would negatively impact on the UK-Ireland economic relations on the long term.