On January 1st, with Brexit, Britain takes ‘a road less travelled’, to paraphrase the American poet Robert Frost, who wrote a poem about the choices in life, and the expectation that once those choices are made destiny is set.
There are other historical parallels there too. Frost wrote his poem in 1916, and, in 1921, the Republic of Ireland left a powerful economic union, the UK, to embark on a path of economic autarky and self sufficiency. That path eventually ran into terminal difficulties in the 1950s, when the Republic of Ireland found itself the only Western European country with a falling population at a time of unprecedented post war economic expansion.
Now the UK embarks on an uncertain new road, as the Republic of Ireland did in 1921 on its own, obsessed with independence for the first few decades, culminating in the peak, or nadir, depending on your point of view, with the leaving of the Commonwealth in 1949.
There are differences from these stark choices, with the benefit of the experience of 100 years of history, hopefully. For one, it is to be hoped that Britain will learn faster than it took Ireland (decades) that there are real perils arising from a path of economic autarky. Likewise, it is to be hoped that Europe, the 27, will learn from Britain’s departure that a excessively centrist federal union, with an inbuilt ‘democratic deficit’ itself will be a global polity in question as long as member states feel uncomfortable with that possibility.
It is likely that in the short and medium term of the next critical years, the two roads travelled by the Republic of Ireland and the UK will be on a path, that will lie, at the outset at least on a more or less ‘Level Playing Field’. It may also be that both paths will remain in plain view of each other, guided initially by the route map provided by ‘Equivalence’ that other concept that will be central to our understanding of the Brexit process in the years to come.
But just as the two paths that lie ahead start from a point of convergence, there will immediately diverging forces leading in different directions. This issue of Finance Dublin, and our Investment Funds Special Report 2021 (p6 SR) contains several examples of this in practice.
SFDR (the Sustainable Finance Disclosure Regulation) will be one such early source of divergence, as it begins to be implemented from next March in an area (ESG) which when Britain voted for Brexit in 2016 was still evolving as a core subject of major concern to all financial services professionals. Another example of our diverging paths will be Ireland’s new ILP legislation, an enlightened addition to the national funds toolkit that President Higgins will sign into law, just as the Brexit paths begin.
Yet as uncertain and hazardous paths begin there is much to hope for for all involved. Britain’s great financial services economy will not go away. The huge connections that will continue to exist between the Republic of Ireland and its closest neighbour will and should remain, and thrive. The Irish Republic finds itself in quite a lucky position as 2021 dawns, notably in financial services.
This article appeared in the December issue of Finance Dublin. The Investment Limited Partnerships Bill was signed into legislation by President Michael D Higgins on December 23rd 2020.