“The forthcoming portion of this year is poised to see an escalation in global political instability. The on-going crises in Ukraine and the Middle East, amplified by a substantial international election calendar, could result in myriad uncertainties. Here, we discuss three potential events that may adversely impact Ireland.
Facing fierce retaliation over immigration, Britain continues to feel the repercussions of their controversial Rwanda deportation strategy championed by Prime Minister Rishi Sunak. Brexit’s failure to calm the situation has led to this issue overflowing into Ireland. Sunak’s assertion that the increase in asylum seekers domestically, after traversing Northern Ireland, is proof of their Rwanda policy’s effectiveness, has plunged Anglo-Irish relations back into frosty territory, reminiscent of Brexit tensions.
Dublin has begun to consider revising current legislation to enable deportations back to the UK, whilst Sunak maintains that he won’t be accepting any deportees “if the EU doesn’t reciprocate with returns (to the UK) back to France”. This situation is predicted to intensify before any resolution is accomplished, particularly with former UK cabinet minister Jacob Rees-Mogg hinting that unlawful immigrants could be transported “to vicinities near the Irish Border”, evidently to invigorate the movement.
Presently, except for Ireland, “every any European country boasting a coastline and deep waters is competing for floating offshore wind.” The influx of more than 104,000 Ukrainian refugees as of 2022, coupled with the state’s strategy of directing them away from an overwhelmed housing system towards local lodges and community centres, together with a rash of incendiary attacks, have tipped immigration to become the foremost issue in Ireland currently.
Strains in the asylum seeker system and the potential fallout from the UK’s Rwanda strategy are nearing a crucial juncture. Concerns are now being raised about whether uncontrollable immigration from the UK could undermine the functionality of the Common Travel Area (CTA) – the agreement that endorses free movement of residents between the UK and Ireland for purposes of residing, working or studying.
The CTA has been instrumental in fostering economic growth in Ireland by smoothing travel paths with Britain, particularly beneficial to the financial services sector of Dublin.
On a brighter note, the currently embattled Sunak is anticipated to be succeeded by Keir Starmer, belonging to the Labour Party that takes a stand against the Rwanda plan. Nevertheless, maintaining a Common Travel Area while managing distinct immigration rules will pose challenges.
Adding to global nuances, the US has witnessed the victory of Donald Trump in its elections.”
The potential return of Donald Trump to the president’s office in November might cause Earth-shattering effects on international commerce; and Ireland, being a small and export-focused economy, stands vulnerable.
Trump hasn’t been shy about his intent to perpetuate tariffs or “a circle” surrounding the American economy if he were to be re-elected. One of the steps he’s suggested is imposing a 10% universal tax on all imports to the US, though he’s indicated that the actual figure might be more significant. He further proposes a tax, as daunting as 60%, on Chinese imports in the hope of revitalising local production.
This course of action has the potential to set off the greatest trade conflict in history and symbolise the most substantial barrier to globalisation yet. During the past three decades, the US has lost nearly five million manufacturing jobs, the highest number since 2000, leading to an unparalleled decline in American standards. The consequence has led to, or intensified, what’s commonly known as the Rust Belt, ranging from the Midwest to the Great Lakes.
Trump has continually attributed the loss of jobs to US corporates shifting jobs overseas and China’s entry into the global trade system in 2000. However, according to predictions by the Organisation for Economic Co-operation and Development (OECD), the IMF (International Monetary Fund), and the World Trade Organisation, global trade is likely to aggressively rebound this year after a sluggish 2023. Yet, they also warn of potential risks, with the surge in protectionism or self-reliance being a significant concern. A Trump resurgence in the White House is undeniably the greatest threat.
Interestingly, economists suggest that Trump’s tariff scheme might induce another inflation round in the US, halting anticipated rate cuts amid persistent high price growth.
While the eurozone economy seems to be moving towards disinflation, increasing geopolitical conflict raises serious risks. Luis de Guindos, vice-president of the European Central Bank (ECB), recently identified the Middle East as a potential trigger for new price spikes. He cautioned that heightened tensions could result in major trade disruptions and obstacles to oil supply, subsequently increasing energy prices and shipping costs in the short term, causing upheaval in global trade. ECB policymakers have also raised worries about high inflation in the service sector due to rising wage demands. The path towards disinflation seems more likely to be turbulent rather than straightforward.
Whilst the euro zone experienced a revival in growth during the initial quarter following a stagnant phase since the end of 2022 due to the energy pricing turmoil, the coalition is set to face subdued growth predictions for the coming biennium, attributed to lower productivity and wage increase. There exists an exaggeratedly hopeful belief that inflation and its consequent economic impacts have been nullified, however, this is accompanied by substantial potential risks.