Irish experts warn of Farage economic fallout from potential Makerfield by-election boost

 The result of the Makerfield by-election could help Reform UK led by Nigel Farage enter Downing Street in 2029 and threaten a new wave of Brexit disruption for the Irish economy, north and south, economic experts warn.

Analysts here are weighing whether current opinion polls that suggest that Reform UK could head a coalition government following a future general election will mean a return to the chaos of recent years.

Many small Irish companies that depend on the large British market for their livelihood will likely wish to forget the nightmare of the Brexit years.

In contrast, multinationals and the largest companies in the Republic fared well. They found ways to get around the so-called land bridge and deliver their goods directly to markets on the continent.

Trucks travelling from Ireland down Scottish and English motorways were hit by the trade uncertainty at ports such as Felixstowe and Dover.

With the help of the EU, new direct services were launched between Rosslare Europort in Co Wexford and Dunkerque in France.

Capacity on the sea routes was subsequently increased and now accounts for a significant slice of the €260bn in pharma, medical and tech and food products the Republic directly exports to world markets and avoiding British ports.

As reflected in Dublin’s ballooning corporate tax revenues, the big tech and pharma multinationals continued to prosper.

Smaller locally-owned firms that spread prosperity across the island fared less well.

Many business people would wish to forget the prospects five years ago of a trade war between the UK and EU that threatened to engulf almost every business north and south.

Economists at the time correctly predicted that Britain targeting specific EU products would likely backfire on the London government, because goods in the North would also be hit badly.

Complex and deep supply and logistics chains and prosperity across the island would be threatened.

There was an outcry when Priti Patel, then Tory backbencher and future home secretary, suggested that a way to apply pressure on the EU for a better Brexit deal would be to remind Dublin about potential shortages of food exports from Britain into Ireland.

The anger wasn’t just only focused on the ignorance of a British politician unwittingly making an allusion to food exports and famine in Ireland.

Most analysts here also identified the economic illiteracy of Brexit politicians and officials threatening trade wars with Europe that would damage supply chains across Ireland.

The Brexit wars again exposed that Whitehall could care less about milk produced on a northern farm and processed by a Cork food plant.

London politicians contemplated economic damage by threatening supply chains linking food and engineering manufacturers across Ireland, north and south.

There was also the issue of the huge Dungannon poultry plant processing chickens grown in surrounding counties.

On the prospects of the British waging a trade war, an economist famously observed at the time that there is no difference between a chicken reared on a Tyrone farm and a Monaghan chicken, when they arrive in Dungannon.

But the threats to indigenous small firms exporting in a small scale to British markets was nonetheless considerable.

With the North remaining effectively in the EU single market for goods, the all-Ireland economy survived the British chaos.

The value of north and south trade in goods alone steadied at around €11bn last year. Recalling the chaos is a reminder to many here that British politics have yet to resolve their Brexit wars.

A government led by Farage could again threaten disruption to Irish businesses and jobs in a deepening all-Ireland economy.

Scanning the Reform UK policies on its website shows the signs of an opposition party not wanting to make specific economic pledges three years from a general election.

But gone is any prominence to the Reform UK pledge in its 2024 manifesto to slash in three years the main rate of UK corporation tax to 15% from 25%.

A deteriorating British economy and high borrowing costs facing the indebted UK state from jittery bond markets probably explains Reform UK’s new focus away from pledging swingeing tax cuts.

Yet, doubling down on crackdowns on immigration will likely do more harm in an economic crisis brewing for the UK. Strikingly, the consensus view of the experts canvassed by The Irish News reveals a deep level of pessimism about the prospects for the British economy.

Professor John O’Brennan at Maynooth University says that the stakes at the Makerfield by-election couldn’t be higher for both Farage and Labour’s Andy Burnham.

“There is a lot riding on it before we even consider what a Farage government could look like,” O’Brennan says, who nonetheless questions whether Reform UK will secure a majority in a future general election.

“And then there is the market”, says O’Brennan, referring to the economic pressures bearing down on the British economy.

“It is not unthinkable that Britain could be facing next year a period comparable to the 1970s – an era of stagflation, rising inflation, rising unemployment, and a fiscal crisis,” O’Brennan says

A Farage premiership would be “unambiguously” bad news for the UK and Ireland, says senior economist Jim Power, who warns that Reform UK policies “would not be good for the UK economy and turn a bad situation into a much worse situation”.

A tougher policy on immigration would also be bad news for Britain and the North “and anything that is bad news for Britain and Northern Ireland is bad news for the Republic”, says Power.

Ciarán Nugent, an economist at the Nevin Economic Research Institute, or Neri, which has offices in Dublin and Belfast, says any large cuts in UK corporation tax by a future government under Farage “would catch up pretty quickly for a new prime minister”.

“It is hard to see how a Farage economic policy would address the longstanding inequality or living standards for the bottom half of households in terms of income,” says Nugent.

Peter Brown, a prominent financial markets commentator and managing director of Baggott Investment Partners, says Britain, to dig itself out of a potential economic crisis, needs to start to unravel Brexit.

But a country led by Farage is obviously “not going to go there”.

“The UK economy is in a bad way: it has high levels of debt, it has high interest rates – it is not an attractive prospect for inward investment compared with the Republic,” says Brown.

When you owe the bond markets a lot of money, you have to behave in a way that keeps the bond markets happy.

“No matter what Farage does, he has to keep the markets happy,” says Brown, who predicts “a bleak” outlook for the British economy regardless of who governs from Downing Street in future years.