On Tuesday the UK is expected to submit new proposals on Ireland, amid mounting business pressure for a deal.
The EU agreed on Friday to enter intense talks with the UK to allow for a deal to be concluded before the Halloween deadline; this follows what British Prime Minister Boris Johnson and his Irish counterpart Leo Varadkar described as “a pathway” to a possible deal last Thursday.
What is clear is that neither Ireland nor the UK are ready for no-deal.
A survey published on Monday in Ireland suggests that half of the small and medium-sized enterprises are cancelling or postponing investment plans in anticipation of a no-deal Brexit. Furthermore, 40% of businesses already adversely affected by Brexit. The quarterly AIB Brexit Sentiment Index is based on the results of detailed phone interviews conducted by Ipsos MRBI with 500 SMEs in the Republic and 200 in Northern Ireland.
About 41% of Irish firms surveyed in the Republic have no plan in place to deal with a no-deal Brexit; 53% of firms say have no plans in place in the North. Just 7% of the companies surveyed have a formal plan while one in three companies expect a hard border both in the Republic and in the North.
The most pessimistic sectors are manufacturing and transport.
Manufacturing across the UK is under tremendous pressure. Aerospace, automotive, chemicals, food and drink and pharmaceutical sectors warn that no-deal places the jobs of 1.1 million people at risk. The sector as a whole does not want the UK to deviate from the EU’s regulatory framework.
Manufacturing contributes more than €110bn to the UK economy. The North of Ireland has experienced its own manufacturing shock when the Canadian-aerospace and rail manufacturer Bombardier decided to sell its operations in Belfast, Northern Ireland in a pre-emptive move ahead of Brexit. The Belfast plant supplies parts to Bombardier and Airbus, producing engine casings, fuselages, and has 3,600 employees.
UK manufacturers sent a letter to Brexit Secretary Steve Barclay and the Cabinet Office minister, Michael Gove, making the case that regulatory deviation could erode their competitiveness and would make it harder to attract skilled labour.
This is the first time the sector has directly expressed to government their concern about a possible Brexit deal, after mostly supporting Theresa May‘s negotiated proposal. The letter outlines the companies’ growing concern that Johnson has dropped existing commitments to maintain regulatory alignment in relevant sectors.