Dr. Tom Healy:

The Deputy has asked a very important question. Perhaps we, in Ireland, have not yet fully realised the strategic implications of Brexit. I am not only referring to job risks and the immediate economic impact. We are likely to be in a 27 member European Union without the United Kingdom and in which severe pressure will be applied in areas across the spectrum of social and fiscal policy, not only on corporation tax. We will have to make a decision on which broad model we will pursue. If we try to proceed at two levels by approximating the sterling cost base - the Deputy referred to this crucial point - I am not convinced we will be able to do this in conjunction with moving towards a more European norm of taxation and enterprise policy and the way this will play out in the labour market. Our costs are below the average for the EU-15 countries, that is, the developed, traditional EU economies in the eurozone. In some cases, our costs are higher than in the UK. When I refer to labour costs I also mean employer social contributions, which are a big element in other European countries.

We have a very painful choice to make. In some cases, it may mean moving away from dependence on UK markets and moving towards higher scale and higher costs, albeit equilibrated by higher productivity, and, in the long run, taking a different strategic position in the market. This will require very careful planning. It is understandable that significant pressure will be applied by some sectors and producers to follow the UK downwards in terms of costs and taxation rates and the recent budget illustrated responses to that. However, this is strategically the wrong direction as we will end up in a place that is increasingly incompatible with the rest of the EU.