A vote in favour of the UK leaving the European Union in June's referendum would have far–reaching and damaging consequences for the economy of Ireland, the Irish Business and Employers' Confederation (Ibec) warned in a report on Monday.
The report said that a Brexit would "remove a shared economic, political and legal backdrop and could set back positive political and economic developments of recent years". Trade flows between the Republic and UK could fall by up to a fifth and there would be a "damaging economic effect" on investment.
Pat Ivory, Ibec director of EU and international affairs said: "Business is deeply concerned at recent polls that suggest the British vote on EU membership is too close to call. The size and economic scale of the UK means the stakes are very high, not just for the UK but for Ireland and the rest of Europe. The UK's EU membership is of key strategic importance to Ireland and Irish business.
"A UK departure would be a blow to the Irish recovery and result in a protracted period of uncertainty for business. It would undermine Europe's ability to act collectively and decisively in the world and could push the EU back into a dangerous period of crisis management. The UK and Ireland have been close allies in Europe across a wide range of areas. An EU without the UK would be a lesser Union."
Ibec said that, with referendum day approaching, the current political impasse over the governance of Ireland following the recent general election, needed to be resolved swiftly.
"Business is now looking for a speedy, comprehensive agreement to be reached between the main political parties that guarantees stability into the future and a government with the clear authority and capacity to manage every eventuality," said the report.
"A vote to leave would demand an immediate, considered and sophisticated response to minimise instability and ensure Irish interests are safeguarded in any subsequent negotiation and settlement."
The Ibec report looked at major impacts on Ireland should there be a vote in favour of Brexit. On the Republic's trade with Northern Ireland, it said, "any disruption to cross-border commercial activity could have a very destabilising effect on the governance and economy of Northern Ireland".
The report added, "A Brexit would result in years of uncertainty as the UK negotiates a new agreement with the EU, involving higher costs for business, new customs procedures and regulatory divergence emerging over time. Trade flows between Ireland and the UK could fall by 20 per cent in a worst case scenario."
Ibec also voiced concerns over the likelihood of a sterling devaluation, making the cost of Irish exports, priced in euros, to the UK.
The report added, "Investment uncertainty, the damaging economic effect of a Brexit and the risk of investment flight would likely prompt the UK to aggressively improve their FDI (foreign direct investment) offering."
"Dublin could benefit if some corporate activity relocated from the UK to the EU, but on balance the risks outweigh any possible advantages. Ireland benefits if our nearest neighbour and close competitor has to abide by the same rules, within the EU."
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