Northern Ireland faces "grave" consequences from a no-deal Brexit, including a "sharp increase in unemployment", a reduced choice of fresh food and the risk of social unrest, the head of the region's civil service has concluded.
The warning from David Sterling comes in a letter to the region's political parties laying out the expected impact of a hard exit on March 29th.
His six-page assessment will heap pressure on Northern Ireland's Democratic Unionist party, whose 10 MPs in Westminster will play a pivotal role in determining whether Theresa May can build a majority for her Brexit deal as she prepares for a potentially decisive House of Commons vote by March 12th.
“The consequences of material business failure as a result of a ‘no-deal’ exit, combined with changes to everyday life and potential border frictions could well have a profound and long-lasting impact on society,” Mr Sterling wrote in an assessment sent to Northern Ireland’s political parties.
Noting that the impact would be more severe than elsewhere in the UK, Mr Sterling added there were “very limited actions that could be taken to mitigate” the worst effects.
About 800 staff have been trained to run an operations centre in Northern Ireland to co-ordinate the response to a no-deal departure, which the civil service fears could potentially prompt unrest in some communities.
‘Scenarios’
“The planning assumptions include the possibility that, in some scenarios, a no-deal exit could result in additional challenges for the police if the approach appeared to be unfair or unreasonable for some of those most affected,” the letter said.
Sinn Féin deputy leader Michelle O’Neill said the analysis “again underlines the recklessness of the DUP and the hard-right of the Tory Party who continue to pursue an agenda which is inexorably leading toward a no-deal Brexit”.
British officials believe that, partly because of the worries about the economic impact of no deal, the DUP could support Mrs May’s agreement in the Commons next week. The UK government estimates that the Northern Ireland economy will be 9.1 per cent smaller over 15 years under a no-deal scenario.
The leadership of the DUP, which provides Mrs May with a majority in Westminster, has recently softened its most trenchant criticisms of the contentious backstop plan for Northern Ireland, which aims to avoid a hard border with the Republic under all circumstances.
Downing Street hopes that the party can be won over if the EU offers legal assurances on the temporary nature of the backstop, which would tie Northern Ireland to the EU’s legal order for goods and customs.
While businesses have warned that the application of tariffs would “have an impact on jobs within a few weeks”, Mr Sterling said this would be “more acutely” felt in Northern Ireland because of the extent of trading with the Republic.
‘Cumulative effect’
He added that Northern Irish businesses “are not adequately prepared for a no-deal outcome”, especially in the agri-food sector, which has “very small profit margins”.
“The cumulative effect of the inability of businesses to prepare, the impact of EU tariffs and significant changes to the regulatory export environment for businesses here could result in business distress, failure or the relocation of some companies to Ireland and as a consequence... a sharp increase in unemployment,” Mr Sterling wrote.
The letter said there was “no material risk of an overall food shortage”.
But Mr Sterling warned that disruption would affect supply chains to supermarkets and the range of products available. “There is likely... to be some reduction in the choice of food available, particularly some fresh produce,” he concluded.
“In effect, there is currently no mitigation available for the severe consequences of a no-deal outcome,” Mr Sterling wrote. “These consequences do not arise from the possibility of checks or controls on either side of the land border, but would simply be the direct consequence of the legal position that would apply.”
Responding to the letter, Aodhán Connolly, director of the Northern Ireland Retail Consortium, said there “should be no surprises” in what Mr Sterling has told the political parties.
“Business leaders have been saying this for over a year. A no-deal Brexit would be disastrous for our economy, for jobs and for our households. A no-deal Brexit will mean a hard border as both the UK and the EU must protect the integrity of their markets,” he said.
– Copyright The Financial Times Limited 2019
