Business leaders across Ireland and the UK have welcomed news of a Brexit breakthrough on the border, but warned that urgent progress must now be made on a trade deal with the European Union.
Elsewhere, Goodbody chief economist Dermot O’Leary said the agreed wording restricts the UK’s options in a post-Brexit environment.
“It’s beginning to look a lot like a soft Brexit,” Mr O’Leary said, claiming that the agreement had resulted from “significant climb downs on the part of the UK that would limit options of trade negotiations with third countries.”
“Both sides are likely to claim credit for progress made in phase one, but it appears to us that the UK has been forced into a corner due to a weak negotiating hand and fragile domestic politics. As a result, the wording on the Northern Ireland border appears to limit the options available to it in hammering out trade agreements with third countries after March 2019.
“An EEA-style option may be coming back on the table. That would represent a good economic outcome for the UK, but far from the best political one,” Mr O’Leary said.
The British Irish Chamber of Commerce welcomed news of an agreement in the negotiations on Friday.
"Businesses will be relieved by the commitment of the UK to avoid a hard border with Northern Ireland by maintaining full regulatory alignment with EU Single Market and Customs Union rules," said director general John McGrane.
“With phase one of negotiations now complete, a swift start to talks on the future trading relationship is now crucial.”
Ibec said it hoped the agreement would inform wider trade talks and deliver and outcome that keeps trade barriers to an absolute minimum.
“The deal provides very important commitments that will ensure no hard border on the island of Ireland and the continuation of the Irish-UK common travel area. It also identifies the need for specific measures to ensure Irish goods can transit smoothly through the UK and on into the rest of the EU post-Brexit. This is a major concern to Irish exporters and importers. It is encouraging to see it explicitly referenced,” said chief executive Danny McCoy.
Dublin Chamber, which represents more than 1,300 businesses, also welcomed the assurances that there will be no hard border after Brexit. It said uncertainty over the border issues had been a dark cloud over the business sector over the past 18 months.
"There is considerable relief in the business community today. The prospect of a hard border threatened to undermine the prosperity of the whole island. We are very encouraged by the UK Government's commitment to avoid this costly mistake. We congratulate the Irish Government on the role it has played in ensuring that a hard border is not created between Ireland and Northern Ireland," said chamber chief executive Mary Rose Burke.
IFA president Joe Healy described it as an “important outcome” for the farming and food sector here, providing the potential to be helpful in “resolving a number of the challenges that Brexit posed for the sector”.
Confederation of British Industry (CBI) deputy director general Josh Hardie said the agreement “would lift spirits in the run-up to Christmas.”
“It’s now time to focus on the true prize of a new relationship and a deal that starts from 40 years of economic integration. With the same willpower shown today and jobs and living standards at the heart of every negotiating objective, these talks can set the UK up for the next 40 years of close alignment,” said Mr Hardie.
“Discussions will continue to be tough, but today’s progress shows that careless talk of walking away can be replaced by confidence that the UK can get a good deal. Steely determination in the national interest must always come first,” he added.
The national chairman of the Federation of Small Businesses in the UK, Mike Cherry, said its members were relieved by the agreement.
“The focus must now shift to the UK’s future trading relationship with the EU. This should include, by early next year, a guarantee that there will be no cliff-edge moment on Brexit day, but instead an orderly, time-limited transition period so that small firms only have one set of rule changes. The final deal must have as few barriers to trade as possible,” said Mr Cherry.
Stephen Martin, director general of the Institute of Directors, said that while talks "went right down to the wire", businesses will be breathing a huge sigh of relief on news of a deal.
“We call on the UK and EU to build on this positive momentum going into the New Year. “It is overwhelmingly in the interests of both sides to begin working on our future economic relationship - particularly in order to fully address the Irish question,” he said.
