Ms Ruth Taillon:

We are pleased to be here to discuss the economic impact of Brexit on jobs and enterprise. The committee will be aware that the Centre for Cross Border Studies was established in 1999 to support and promote cross-Border co-operation on the island in the context of the imperative for cross-border co-operation embedded in the Good Friday Agreement. One of the areas where such co-operation can lead to positive outcomes for the two jurisdictions on the island is economic development. This is also an area that will face significant challenges in light of the outcome of the UK's membership of the European Union, in regard to which we may not have too many solutions today but some issues to raise.

The magnitude of the challenges will depend on the nature of the UK's post-Brexit relations with the EU and the extent to which Ireland's specific needs can be accommodated by the Commission and the other 26 member states, as well as the Irish economy's capacity to reorientate its exports focus from the UK market. The importance of the British market specifically to the economies of both parts of this island is such that any significant downturn in consumer confidence in that market arising from Brexit will have negative impacts North and South, including job losses. We have already witnessed the closure of several agrifood businesses this side of the Border due to the steep fall in the value of sterling in the wake of the referendum result. It is to be welcomed, therefore, that the Irish Government has identified the risks posed by Brexit to the economy, trade and investment and that its contingency planning includes the proposed introduction of measures to develop market diversification and strategies to tackle variations in the value of sterling.

Given our organisational focus, the centre notes in particular the Irish Government's inclusion of the need to monitor closely the impact of the UK's decision to leave on enterprise and trade in the Border counties, that how Border counties may be affected by a prolonged sterling devaluation will receive special consideration and that the relevant regional action plans for jobs will be revised accordingly.

Whereas Brexit will have consequences for the wider economies in both jurisdictions, it will perhaps be in the counties immediately North and South of the Border where we will witness the true nature of the post-Brexit environment in which businesses and those involved in economic development will have to operate.

In view of our particular focus, I would like to simply identify three challenges that the post-Brexit environment is likely to pose specifically for cross-Border economic activity and collaboration. These challenges, which we can discuss in further detail if members wish, assume that the UK does not opt to retain access to the EU's internal market and, therefore, will no longer be bound to accept the principle of freedom of movement of EU citizens. Currently, both the public and private sectors have the ability to widen their pool of labour and skills to include both jurisdictions on the island of Ireland. While there is no definitive data on the number of commuters who cross the Ireland-Northern Ireland Border to work, based on the available estimates, we think somewhere between 23,000 and 30,000 people are cross-Border workers. The UK's exit from the EU, particularly if the UK does not retain access to the Single Market, could have significant impacts on the situation of these cross-Border workers and on the continuing ability of businesses to employ workers from across the Border. We run an information services for cross-Border commuters and the number of hits on that website on 24 June was double its daily average for the previous month. There are a lot of worried cross-Border workers and commuters. It could have a real impact on employers' ability to employ workers from the other side of the Border. The current body of cross-Border workers also includes quite a significant minority of people who are EU citizens but not citizens of the UK or Ireland. This raises all sorts of issues, whatever the result of the negotiations, around some version of a common travel area might be.

The imposition of customs controls will not only have obvious consequences for businesses involved in cross-Border trade but will also reduce the effectiveness and even viability of all-island supply chains. This is something about which many businesses would be concerned, particularly those within the agrifood sector. All-island supply chains may also have to face the possibility of policy divergences between the two jurisdictions in areas such as animal health, plant health, food labelling, state aids, competitiveness and veterinary restrictions. The risk these challenges pose is that in some cases, supply chains will be shortened to within the confines of one jurisdiction with the consequent loss of economic activity to the other jurisdiction and the island.

Policy divergences and the loss of access to relevant EU funds for businesses and research institutions in Northern Ireland will also create additional difficulties in the area of innovation. This would also apply to universities, which I know are very concerned. A 2013 OECD study on cross-Border collaboration in innovation noted that the all-island dimension would be the most profitable way for both jurisdictions to support innovation and enterprise. However, Brexit could disrupt the potential for all-island co-operation in innovation and thereby undermine the ability of businesses to increase their competitiveness and bring new products to market. These are just some of the challenges that Brexit presents us with and they are certainly ones that apply to this committee. A collective failure to rise to those challenges risks an insularity that is fatal to economic development and that is particularly detrimental to a Border region that is already peripheral in the pre-Brexit context