Post Brexit Costs & Demand for Dublin Office Space Over-Exaggerated

Alan Clerkin

Alan Clerkin

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dublin-city-1A recent report from Savills, claimed new office space planned for Dublin will be enough to accommodate companies seeking to relocate in the wake of Brexit.

Savills Skyline Survey states, 136 new office buildings – totalling over 12 million sq ft – are being planned for Dublin over the next five years, enough to house 100,000 new employees.

The report went on to state, “if any UK-based companies decide to move operations to Dublin on foot of Brexit – and we believe they will – it will not happen immediately.” The report however didn’t provide concrete proof for any present of future post Brexit influx.

While the report acknowledges that not all planned developments will proceed, if just half of those buildings advance to completion, Dublin will be able to handle an inflow as UK-based companies look to transplant their operations post-Brexit.

In relation to the UK, it is highly probable that a favourable trade agreement would be reached after Brexit as there are advantages for both sides in continuing a close commercial arrangement. But the worst-case scenario, in which Britain faces tariffs under ‘most-favoured nation’ rules, is certainly no disaster. Exporters would face some additional costs, such as complying with the European Union’s rules of origin, if they were outside the single market. However, these factors would be an inconvenience rather than a major barrier to trade.

The figures speak for themselves – about 44% of UK exports in goods and services went to other countries in the EU in 2015 and 53% of imports into the UK came from other countries in the EU in 2015.

The benefits of being in the European Union are smaller than they were a few decades ago, when a Brexit would have been a far bigger deal. However, the effects will vary across sectors. Brexit would give Britain a crucial opportunity by allowing it to broker its own trade deals with non-European Union countries; indeed Britain could even have a unilateral free trade policy. Non-European Union countries may find negotiating with Britain easier and quicker than dealing with the European Union’s bureaucratic machine, as Switzerland has shown.

Despite claims of many authors and commentators, it is probable that the impacts of Brexit on trade would be relatively small. Moreover, it is certainly possible that leaving the European Union would leave the external sector better off in the long run, if Britain could use its new found freedom to negotiate its own trading arrangements to good effect.

Financial services have more to lose immediately after a European Union exit than most other sectors of the economy. Even in the best case, in which passporting rights were preserved, the United Kingdom would still lose influence over the single market’s rules. The City would probably be hurt in the short term, but it would not spell disaster. The City’s competitive advantage is founded on more than just unfettered access to the single market. A European Union exit would enable the United Kingdom to broker trade deals with emerging markets that could pay dividends for the financial services sector in the long run.

It seems the costs of Brexit for the British economy are wide of the mark and lacking in evidential bases and there is little clear evidence that they would be a huge surge in demand for office space in EU cities such as Dublin.

At Dublin Mail Drop we saw a surge in inquiries regarding our virtual office services in July/August after the vote for Brexit – however this has since levelled off. UK companies already have a large presence in Ireland including many financial institutions and rumours of large British banks moving lock stock and barrel to Dublin are greatly exaggerated.

In fact in a recent interview with the Guardian newspaper, Steve Eisman, who is played by Steve Carell in the Oscar-winning The Big Short, predicts another financial crisis is on its way in Europe.

“Europe is screwed. You guys are still screwed,” says Eisman. “In the Italian system, the banks say they are worth 45-50 cents in the dollar. But the bid price is 20 cents. If they were to mark them down, they would be insolvent.”

Eisman also states “I’m not really worried about England’s banks,”. “They are in better shape than most in Europe.”

In fact, if there is economic turmoil at a future date in Europe, would that not define a clear economic advantage for Brexit and the UK, which many commentators haven’t taken in to account?

Alan Clerkin