As Phase 2 of Brexit talks look set to begin in early 2018, and as the UK strives to agree a new trade deal with the EU, it is timely to take stock of the challenges and risks which will confront Irish cities in the coming year and beyond as a result of the UKs decision to leave the EU. A number of key questions present themselves.
- Will Irish cities be resilient enough to cope with Brexit whatever its outcome?
- Will Irish SMEs dependent upon exports to the UK be able continue to compete in that market, whilst also pivoting towards new markets?
- Will small cities and towns along the border between Northern Ireland and the Irish Republic stagnate?
- Will Irish cities play their part in stemming a seeming hardening of attitudes towards immigrants?
- Will these cities position themselves well in the post-Brexit global competition to attract and retain talent?
The EU ERDF URBACT III programme furnishes Irish cities with resources which, if capitalised on, have the potential to help local authorities to act to mitigate the most damaging effects of Brexit. Clearly in the face of this major geopolitical rupture, URBACT alone is limited in the contribution it can make. But through its methods, centred upon sustainable, integrated, and participatory urban development, and its various networks and good practice models, URBACT offers more Brexit proofing tools than Irish cities are currently availing of.
So what are we missing out on and how can we access these resources and put them to work?
Key facts on Brexit
On 23 June 2016, the UK voted to leave the EU by 51.9% to 48.1%, with a turnout of 71%. On March 29th 2017 Prime Minister Theresa May triggered Article 50 of the Treaty of Lisbon and entered into a scheduled two-year process exiting the EU.
In June 2017, the EU notified the UK that it required ‘sufficient progress’ to be made on three fronts (to be negotiated as part of Phase 1 talks) before entering into discussion on a future post-Brexit trade deal between the UK and the EU27 (to be negotiated as part of Phase 2 talks). On December 8th 2017 President of the European Commission Jean-Claude Juncker confirmed that the European Union was satisfied that enough progress had indeed been made in all three areas to progress talks to Phase 2:
- The UK has agreed to pay a so called ‘divorce bill’ of between £35bn and £39bn, according to Prime Minister Theresa May;
- Some important rights enjoyed by three million EU citizens currently living in the UK and one million UK citizens living in an EU country will be protected for a definite period of time, with a limited but ongoing role for the ECJ in the UK (up to 2028);
- No new regulatory barriers will be erected between the Irish Republic and Northern Ireland and between both and the rest of the UK, even if the UK fails to agree a future trade deal.
Juncker also accepted the UKs request for a two-year ‘transition period’ to come into effect from March 2019 and concurred with Prime Minister May that nothing can be fully agreed (set in stone from Phase 1) until everything has been agreed (at the close of Phase 2). The European Council ratified Juncker’s confirmation of progress at their meeting on December 14th and 15th 2017.
It now remains to be seen if a post Brexit trade deal can be negotiated. The nature and scope of any such deal is likely to depend upon what Brexit means in practice.
A ‘hard’ or ‘clean’ Brexit would see the UK leaving the Customs Union and Single Market, regaining full sovereignty and securing full control of its borders and entering into a new set of arrangements with other global economies. Given the importance of UK-EU ties, perhaps a special trade agreement with the EU might be reached. But the UK would be negotiating as a wholly independent non-member state and the EU would be just one of many economic blocs it would be seeking to do business with.
A ‘soft’ Brexit in contrast would witness the UK establishing an alternative accommodation with the EU (perhaps the UK would remain a member of the European Economic Area (EEA) and the European Free Trade Association (EFTA) in an approach similar to that taken by Norway) and enjoying ongoing access to the EU market but it would also require the UK to comply with most European legislation and to accept the EU’s four freedoms – the free movement of goods, services, capital and people.
Theresa May has pledged that the UK will be seeking a clean break with the EU and will not be part of any EU Single Market or Customs Union. In May’s own words, Brexit means Brexit. But still May anticipates a favourable trade deal with the remaining EU 27 for the UK after Brexit. This seems optimistic. French President Emmanuel Macron and German Chancellor Angela Merkel have indicated that whilst they are keen to work towards an optimum outcome for all countries, the UK can expect no special treatment. One cannot enjoy the benefits of the EU without accepting the obligations of EU membership and it would undermine the EU were anything to the contrary to be signalled to other member states.
In the event that a Brexit agreement cannot be concluded within two years, EU Treaties will cease to apply to the UK, the UK will leave the EU on 29 March 2019 via a ‘disorderly exit’ and having fallen of the cliff edge, the relationship between the EU and the UK would fall back to general pre-existing World Trade Organisation (WTO) rules. Whilst Theresa May continues to argue that ‘no deal is better than a bad deal’, this default position would have serious implications for both the UK and the EU and few are commending it.
Brexit: An existential threat to the Irish state?
According to both former Irish Taoiseach (Prime Minister) Enda Kenny and new Taoiseach Leo Varadkar (from June 2017), Brexit represents the greatest single existential threat to the Irish state since the founding of the Irish Free State in the early 1920s.
Why so?
Brexit threatens to unravel the peace process in Northern Ireland. Since 1968, over 3,600 people have died in ‘the troubles’, between Irish Catholic, Nationalist and Republican communities many of whom call for a re-unification of the island of Ireland (Northern Ireland leaves the UK and rejoins the Irish Republic to the South) and British Protestant, Unionist and Loyalist communities, most of whom cherish British jurisdiction over Northern Ireland. From 1998, however, the Good Friday Agreement (GFA) which rests on an invisible border between North and South, and free and unfettered movement of people, goods, services, and capital across the border has paved the way for a peaceful power sharing assembly in Northern Ireland. Were the UK to pursue a hard Brexit and were Northern Ireland to leave the EU on the same basis as the rest of the UK, it is likely that a hard border (well policed with checkpoints) would need to be reintroduced, risking the peace.
Moreover, because of its deep historical ties to the British economy, the Irish economy is especially vulnerable to a hard Brexit. Ireland is only now emerging from a decade of unprecedented economic crises and painful austerity. But Brexit has the potential to derail the fragile story of the Celtic Comeback. Whilst it has sought to reduce its dependency on the UK, Ireland is still heavily reliant on the UK as a trading partner with 17% (€39bn) of all exports destined for the UK and 14% (€30bn) of all imports sourced from the UK. Some sectors are particularly exposed, such as the Agri-food sector, where 39% (€4.8bn) of products are exported to the UK and 47% (€3.7bn) are sourced from the UK. Economic models estimate that a 1% reduction in UK GDP will reduce Irish GDP by 0.3%. On this basis, current predictions suggest that Ireland’s GDP level could be between 1 and 3% below baseline after ten years.
The Irish government recognised just how serious Brexit was at an early stage, started preparing for Brexit even before the UK referendum took place and has developed a powerful high level ‘contingency framework’ (download here). The result; Ireland is arguably the EUs best prepared country.
Brexit proofing Irish cities: Building resilience through URBACT
Still, it would be a stretch to say that Irish cities have been Brexit-proofed. Policy makers are still trying to think through the potential impact of Brexit on their regions, counties and cities and how they might act now so as to mitigate risks and capitalise on opportunities. In these deliberations the EU ERDF funded URBACT programme (currently in phase III, 2014-2020) might prove to be helpful. Here, and with reference to a number of relevant URBACT networks and good practice cities, we draw attention to the resources, learning and tools, which this programme might contribute.
For resilience: managing cities in an age of uncertainty and risk
Building the capacity of cities to weather the vicissitudes of the global economy and current geopolitical upheavals and to better absorb shocks and adapt in unpredictable environments has become a key priority, not least for Irish cities. With all its unknowns, risks and threats, Brexit is serving to further underscore the importance of building resilience into city strategies and local institutions and policies. The Resilient Europe network aims to help cities to prepare themselves to more quickly recover from unscheduled stresses and acute shocks. Resilience is defined as ‘the capacity of urban systems, communities, individuals, organisations and businesses to recover or maintain their function and thrive in the aftermath of a stress event’. But the emphasis is not only on ‘bouncing back’ quicker but ‘bouncing forward’ by transitioning and growing stronger.
(Re)positioning Irish SMEs
Brexit threatens Irish SMEs because it may result in new trading arrangements; possible tariffs, changes to regulations and standards, possible border controls, new certification rules (including veterinary and health certification) and a devaluation in Sterling. Irish SMEs will need to innovate if they are to continue to compete in the UK market and/or redirect their attention to new markets. Enterprise Ireland (EI), a flagship state agency which seeks to birth, incubate, scale and globalise Irish SMEs, has set in place a comprehensive strategy to help companies to deal with Brexit. The EI Brexit ‘Scorecard’ helps SMEs judge how ‘Brexit ready’ they are in six areas: Business Strategy (mid to long term plan of action to achieve sustainable, profitable growth); Operations (design, delivery, improvement of systems to deliver products and services); Innovation (new product / service or process development); Sales & Marketing (understanding, meeting market needs; generating, converting leads into sales); Finance (management of financial resources to achieve business objectives), and; People and Management (alignment of organisation structure, management and skills to objectives) (for more information see ambition.enterprise-ireland.com/prepare-for-Brexit)
Barcelona’s Good Practice Inclusive Entrepreneurship Model (IEM), confronts barriers which prevent social groups such as women, youth, and people over 45 face from becoming entrepreneurs and starting their own businesses. IEM is a business service adapted to appeal to ‘vulnerable’ populations who may not benefit from conventional entrepreneurship services. Meanwhile, Bologna’s Good Practice IncrediBOL! Creative innovation, works to boost the cultural and creative industries (CCI) in the Emilia-Romagna region using a simple formula: small grants + spaces + tailor-made services = successful start ups. A competitive grants program drives the birth and early development of SMEs in the CCI sector. Elsewhere, the Greek city of Piraeus, also a URBACT Good Practice city, has launched a project titled Promoting entrepreunership and innovation on maritime economy. In 2014, Piraeus put in place BlueGrowth, a first-established at EU level innovation competition for the maritime economy (Blue Economy), with the objective of strengthening traditional economic activities related to the maritime economy through applying innovative business ideas. Finally, AGRI-URBAN is an URBACT network which is seeking to rethink Agrifood production in small and medium-sized cities through innovation, new business models and making the most of clusters of related actors.
Developing smaller ‘border’ cities and towns
The welfare of smaller cities and towns in the border region, connecting the Irish Republic and Northern Ireland, a marginal space in both the Southern and Northern economies, is especially at risk in the Brexit process. Smaller border cities and towns rely on the existence of Common Travel Area (CTA) between the Irish Republic and the UK. The CTA has been in existence since the early 1920s and has been consolidated and affirmed periodically, in the 1950s, at the time of the Good Friday Agreement (GFA) in 1998 and most recently in 2011. A mini-Schengen of sorts (neither the UK nor Ireland are part of Schengen proper), the CTA allows citizens of the UK and Ireland (including the Channel Islands and the Isle of Man) to move freely across the border without a passport and to live and work in each other’s jurisdictions. The conclusion to Phase 1 Brexit talks affirms that the CTA will survive Brexit; still concerns about its long term future persist. The development of smaller border cities and towns will depend on preserving the CTA, scaling of cross border spatial planning interventions and pursuing innovative local development strategies.
TOWN TEAM is Good Practice based in the border town of Monaghan in Ireland. Town Team was set up to drive the revitalisation of Monaghan Town by further improving the retail offer through investment in retail and hospitality, improved citizen engagement and public realm interventions (including enhanced standards and security). Meanwhile, INT-HERIT brings together 8 small and medium-sized European cities who share the common goal of revitalizing their local cultural heritage through innovative heritage management. Elsewhere, Grand Genève, the Geneva (CH) metropolitan region, serves as a Good Practice example for its project Planning model for cross-border agglomeration. Grand Genève straddles two countries (Switzerland and France), three territories (Geneva Canton, Lyon District, the French Regional Cooperation Assembly (ARC)), and a number of administrations (Geneva City, Auvergne-Rhône-Alpes French Region, and two French departments). To co-ordinate solutions to key metropolitan wide problems (in the areas of housing, transports, environment, and social cohesion in particular) an innovative vehicle, the Local Association for Cross-Border Cooperation (GLCT) has been created.
Extending hospitality and promoting migrant integration
Brexit arose as a populist movement in the UK, in part as a response to a perceived loss of control over immigration. Anxiety over immigration in the UK has heightened with EU accession and the Syrian refugee crisis. Populisms of this variety threaten to rise with equivalent political force elsewhere. Brexit then points to a need to promote social cohesion and migrant integration. Furthermore, there is a need to ensure that existing EU citizens dwelling in the UK and UK citizens living in the EU (including in Ireland) continue to enjoy rights, conviviality and hospitality.
Arrival Cites is a network which supports effective use of migrant human capital, migrant access to key services such as housing, health and education; the fight against xenophobia; the involvement of the private sector in migrant inclusion; and e-Inclusion (use of the new technologies). Don’t Feed the Rumour a Good Practice project, is part of a communication strategy developed by the municipality of Amadora in Portugal to tackle unhelpful rumours which stigmatise migrants and undermine social cohesion. Supported by trained anti-rumour agents and the creation of an anti-rumour network, a viral communication strategy has been set up and already showed good results, such as a more positive attitude from native Portuguese regarding immigrants. Meanwhile, Refugee Solidarity is the name given to a Good Practice set in the city of Ghent. This city has experienced an escalation in the number of asylum applications. In response, it has developed a Refugee Taskforce comprising all relevant stakeholders including politicians, city administrators, and citizens. This TASK FORCE has worked to improve refugee shelters, information flows to citizens and transparency around decision making, anti-racism, and the rights of refugees to access housing, education and work.
Attracting and Retaining Talent
On the other hand, there is no doubt that skilled workers in the UK (whether, British, EU, or rest of the world in origin) are considering their residency in the light of Brexit. The already tough global competition to attract and retain talent looks set to intensify. Here, Dublin (and perhaps other Irish cities) is well placed to benefit from staff relocating from the UK because of unhelpful attitudes to foreign residents.
Gen-Y City is a network dedicated to attracting and retaining entrepreneurial and innovative talent – the so called Gen Y or Millennials. Gen-Y cities are cities which seek to create optimal conditions for the development of the personal and professional lives of creative young talent. It is attempting to diagnose the needs of the Y generation, develop new channels of effective communication with them and develop strategies to attract and retain them. Internationalisation for sustainable future is a Good Practice set in the city of Groningen. Small and traditionally regionally oriented, Groningen, like many university cities, is becoming increasingly international. The mission of the project is to use the city’s assets, including its university, to attract talent so as to secure its role as a hub in the global knowledge economy. Specifically, the programme works to attract, retain and integrate new residents while maintaining a high level of social cohesion and liveability.
Getting ready for Brexit
As one of the EUs fastest, first, and pioneering responders to Brexit, the Irish government’s preparations for Brexit merit wider attention. Whilst exposed to unique challenges, because it is preparing so rigorously, the Irish example is one which other member states would do well to consult. But equally, Ireland has lots to learn from other EU countries and their cities in particular, which might help it and its own cities in particular to survive Brexit.
In this short article we have explored the resources and tools available to Irish cities from the current URBACT III programme. We have engaged only a subset of the URBACT networks and practices which are currently active and have sought merely to illustrate the value of deepening conversation between Irish cities and URBACT. For URBACT, if they work to implement sustainable, participatory and integrated urban development, Irish cities will put themselves in the best position to weather the Brexit storm. In building their capacity to survive the incoming Brexit storm, Irish cities should more fully avail of the capacity building assets provided by URBACT.
Prof. Mark Boyle and Caroline Creamer
