Food and drink trade between Ireland and Great Britain has borne the brunt of a wider slump in the wake of the EU imposing checks on British goods this year, a study by the Economic and Social Research Institute in Dublin has revealed.
Researchers from the ESRI, Ireland’s Department of Finance and Trinity College Dublin said there had been a “sharp decline in trade between Ireland and Great Britain since January 2021”, with “the food and beverage sectors particularly negatively impacted”.
Ireland sent 10.9% of its total goods exports to Great Britain in 2015, the year before the UK voted to leave the EU. However, that percentage was down to 6.3% for the first eight months of this year. It also sourced almost one-quarter of its goods imports from across the Irish Sea in 2015, but the impact of Brexit saw that fall to 7.2% this year, the ESRI added.
Conversely, the state-funded body said commerce between Ireland and Northern Ireland had “increased considerably” this year, with “food and beverages” described as “key” to the rise.
However, despite Northern Ireland being treated as almost a de facto part of the EU, the drop in trade between Ireland and Great Britain has so far only been “slightly offset” by Northern Ireland’s share in “total Irish imports”, which climbed from 1.5% in 2015 to 5% last year – meaning Northern Ireland was the source of 40% of Ireland’s goods bought from the UK as a whole.
“Food and beverages show particularly large reductions in their shares coming from Great Britain while the share accounted for by Northern Ireland increases substantially in these same sectors – going from 5% to almost 20% of beverage imports between 2015 and 2021, for example,” the ESRI report outlined.
International trade has been rocked all year by the impact of the pandemic and supply chain spoilers such as inflated shipping and energy costs. The ESRI said it sought “to control for other changes in trade patterns” in its report, which looked mostly at the impact of Brexit on trade across the Irish Sea.
But according to the Institute, it is hard to assess “the extent to which the increases in trade between Northern Ireland and Ireland are a result of substitution away from trade with Great Britain by Northern Ireland firms”, as data is not yet available on annual trade flows between Northern Ireland and Great Britain.
The UK government last week warned again that it could jettison the deal with the EU that gave Northern Ireland a separate post-Brexit trading status to the rest of the UK, citing what it said were “burdensome customs and SPS arrangements for goods moving between Great Britain and Northern Ireland” that “have had a chilling effect on trade, increasing costs and discouraging firms from trading within their own country”.
Ireland’s overall goods exports to Great Britain were not as hard-hit as its imports, according to the ESRI, which put an “overall asymmetric impact” down to “the more gradual introduction of customs procedures on inward goods in Britain”.
“There has been a less substantial impact on exporters,” according to the ESRI’s Martina Lawless. She described as “good news” the announcement last week by the UK government that it would temporarily exempt the island of Ireland from checks on EU imports that are due to be implemented from January 1.
Last week, the Food and Drink Federation said UK exports of food and drink were down almost 16% in the first three quarters of 2021 compared to pre-pandemic levels, a fall it said was “largely due to a drop in sales to the EU of £2.4bn”.
Exports to Ireland, the UK’s biggest food and drink market according to the FDF, fell by a quarter. Meanwhile the UK’s food and drink imports from Ireland were down by a fifth over the time period, the FDF estimated, part of a wider 11% fall in imports from the EU.