The senior civil servant running Northern Ireland’s public services since Stormont collapsed has expressed his deep concern for the region if there is no Brexit deal.
David Sterling, the head of the Northern Ireland Civil Service, told an event in Brussels that many local firms might find it “impossible” to continue to trade normally if they are faced with Irish border tariffs.
Addressing the European Policy Centre think-tank, Mr Sterling outlined the challenges preparing for Brexit in the absence of elected ministers.
“I cannot stray into political territory, however you will not be surprised to hear that we have deep concerns about the risk that no deal is agreed and there is chaotic exit from the EU,” he added.
“Under such a scenario, costs for our businesses could significantly increase or create what might just be impossible for many firms, particularly in our agri-food supply chains, to trade normally in this era of ‘just in time’ processing and manufacturing.
“In the life cycle of many goods they have to cross the land border many times.
“Our research has shown that two-thirds of cross-border trade involves supply chain activity.
“How would this work if they had to make Customs and VAT declarations each time?”
Mr Sterling said there were one million cross-border deliveries a year.
“Nearly 75% of these deliveries are made by small businesses and the majority are low-value exports,” he added.
“All of which points to a limited ability to absorb additional costs.
“In the event of a no-deal scenario, we assume that WTO tariffs would apply and this would have negative consequences for our economy.”
In addition to tariff barriers, the head of the Northern Ireland Civil Service said regulatory divergence would also cause difficulties.
“These are significant issues for businesses in our local economy, particularly as many are already trading within fine margins,” he said.
“Northern Ireland’s place in the all-island economy is a fundamental part of our economic makeup. Simple geography has led to the development of cross-border relationships that are visible in the Single Electricity Market and our agri-food industry.”
Mr Sterling stressed that Northern Ireland was also “deeply integrated” within the UK economy.
He added: “Our businesses have told us very clearly that any significant new costs and pressures on business from either direction would be unwelcome and potentially damaging to our economy.
“There is a significant flow of goods and services both east-west and north-south that must not be put at risk, if we are to protect the economy.”
Mr Sterling said he hoped an agreement could be reached.
“I hope this is right, for there is too much at stake for all of us,” he said.
Mark Malloch Brown, chair of anti-Brexit campaign group Best for Britain, said: “The government has had two years to work this one out. Now we’re seeing the consequences of kicking every tough decision into the long grass.
“And it’s not looking good going forward either. That means those in Ireland have to wait to find out whether this government wants to safeguard their fragile peace settlement. That’s not fair and it’s not what’s best for Britain.”