Briain Kelly

Since before Ireland was a nation, there’s always been a certainty that Britain was our lifeline, our oldest friend/enemy, and our most important trading partner. 

But since Ireland joined the European Union in 1973, and entered into its single market, that has become an increasingly outdated sentiment.

Now, with the United Kingdom set to divorce from the European Union in two years time, the question is being asked “Who’s side should we be on?”

The only pragmatic way to answer that question is to ask ourselves which of them is worth more to the Irish economy today.

Back in the first half of the 20th century, Ireland was a developing nation. Most of our exports were agricultural in nature, and the majority of our imports came from Britain.

However in the decades since we joined the EU, the United Kingdom has lost the best part of its share of Ireland’s international trade.

In 1977 the United Kingdom still held roughly a quarter of both Irish imports and exports. Over the next 40 years that would undergo a steady decline, though uneven in the two different fields.

In 2016, imports from the UK had declined to 14% of the Irish whole, however exports to the UK had been decimated, amounting to just 7.3% of what Ireland exports.

Access to the single market would have significantly expanded the reach of Irish exports. EU rules impose tariffs on goods from non-EU countries. In 1977 Ireland had only been a part of the EU for four years, business relationships were still in their infancy. There was also a growing trend of globalisation and free trade agreements that increased Ireland’s access to international markets.

But for importing goods the UK took less of an impact, though the loss was still sizable. The proximity of the UK and long standing trade partnerships would be contributing factors to the retention of business.

The growth in trade exports was wildly disproportionate between different sectors of the economy. In 1977, industrial and agricultural output were still quite close in relative value, with forestry and fishing contributing a statistically negligible amount to the overall balance of trade.

Since the mid 70s Irish industrial output has exploded. In 1977 industrial exports were worth €1.45b (adjusted for value in euros) next to €930m for agricultural goods.

This might seem like a significant margin, a difference of 56%. However by 2016 the margin of difference between industrial products and agriculture expanded massively.

According to figures from the Central Statistics Office, in 2016 agricultural exports amounted to €5.6b, whereas industrial products were worth nearly ten times as much at €52.7b.

While agricultural exports to Britain have mostly stayed quite close to those going to the EU, declining by only 1.9% between 1977 – 2016, the same cannot be said of industry.

In 1977 the United Kingdom accounted for 63% of industrial exports, a majority share. However by 2016 the ratios had completely reversed. The EU held 79% of the €52b in industrial exports.

The UK’s situation was not a steady deterioration, it’s peak share of industry came in 2002, when it held a 35%, €19.8b out of €56.6b total.

However over the next 14 years the volume of UK industrial exports collapsed drastically to nearly half of its previous value, €10.9b. The single greatest fall was between 2002 and 2003 when they lost €7.6b in value in a single year.

It is difficult to attribute what the cause for this loss was, as the recession had yet to occur, and exports to the EU overall continued to grow over the same period. The only significant factor at the point in time that could have affected commerce so drastically is that in January 2002 Ireland officially rolled out the euro after adopting the shared currency in 1999.

This massive loss explains why the UK explains why the UK’s share of exports fell so much further than that of imports. In the period in question, Industry came to be the dominant share of Irish exports.

Agriculture started in a strong position at 38.57% of the export market, it even enjoyed a small growth of 0.86% share in 1978. But after that value plummeted in relation to industry until, last year, it accounted for less than 10% overall.

This is an astonishingly small share, and directly contrasts with the popular image that Ireland is still very much an agrarian country. While agriculture may still be the strongest single sector, it does not compare with the combined value of different high-tech industries that characterise 21st century Ireland.

A strong poetic comparison can be made that it is very similar to how Britain does not compare to the EU bloc. And those are the sides as we will have to see them in any negotiations; do we stand with the UK, or the other 26 EU member states.

Forestry & Fishery has hardly seemed worth mentioning in all of this, never accounting for more than 2% of exports overall. But there is some interesting information to be found when looking at the volume of fish sent to different countries in Europe, versus the price that they commanded.

The UK imported 60,000 tonnes of fish from Ireland in 2004, the most recent year for which information is available. This is nearly twice as much as France’s 33,500 tonnes, the next largest importer.

Despite this the UK did not pay nearly as much as France for its product. French imports generated €87.5m in revenue, compared with €72.2m for the UK, a difference that is much more glaring with how much each purchased.

Another way of examining the data is in terms of how much each country payed per tonne for the fish they purchased. The highest price paid by any country per tonne was Italy, who paid €4740 per tonne having only purchased 4,566 tonnes of fish in 2004.

In general it was the countries who purchased small quantities of fish that paid the most. That is not unexpected as prices are always driven down by buying in quantity. Additionally, the prices of local goods such as fish would increase based on the how far they are from an area where they can be caught.

The UK fares some what better in the breakdown of goods being imported to Ireland. These goods can basically be divided into into two categories. Consumer goods, those ready to be sold straight to the public, and Capital goods, components/ingredients in the production of other goods.

Ireland still imports a significantly larger share of its Consumer goods such as Food, and Drink from the UK, a combined €6.96b in 2016. Again, transportation costs and routes would feature into this.Consumer goods are bulky and expensive to ship, so it is cheaper to source them from a closer location.

This data does not track the route of goods however. Consumer electronics and many other items originate from countries around the world. The UK would be the last shipping hub on the route to Ireland, and is recorded thusly as the source of the imports.

Capital goods is another story, Ireland imported just under €10b in Capital goods from the rest of the EU bloc in 2016, compared with €1.45b from the UK.

More goods in shops come from the UK, however the disparity in Capital goods means that the EU bloc contributes more to Irish manufacturing itself by providing the materials required.

The trends contained within this data shows that the EU bloc plays a larger part now in the Irish economy than the United Kingdom, despite the popular perception that still persists in people’s imaginations.

That disparity is only likely to grow with time as the UK economy shakes post-Brexit and Ireland grows its global reach and ambition.

We have to be careful of tying ourselves too firmly to the past out of sentiment and see where the future lies.