Should Ireland follow the UK and leave the EU too?

Ireland's GDP is set to take a hit after Britain leaves the union

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British Prime Minister David Cameron (left) greets Taoiseach Enda Kenny outside 10 Downing Street in London in 2016 | Image: Yui Mok / PA Wire/Press Association Images

An influential London-based hedge fund thinks that Ireland could be forced to follow the UK and to leave the European Union to limit the economic impact of the historic vote.

Toscafund, which was founded by Martin Hughes and manages assets worth £3bn, argues that disruption caused by Britain leaving would force Ireland to also go.

Its paper, titled Britain stands up – Better to exit European Union, says that the value of trade between the regions, which is worth €1bn per week, could be affected by new trade restrictions if the UK goes. If Ireland has forced to comply with these rules it says that the country would be better off outside of the EU.

Toscafund’s chief economist, Savvas Savouri commented on the relationship between the UK and Ireland: "Ireland quite frankly has a connection with the UK like no other eurozone nation, indeed none other across the EU. And it is this connection which would be broken, were the UK to be isolated."

Speaking to The Irish Times in February, he added that in his opinion Ireland, and Scotish separatists, "need to realise that economically their interests are best served joining England in engaging with a flourishing Asia. Their alternative is floundering with the rest of Europe."

According to research by Open Europe, in a worst-case scenario, where the UK is not in a position to negotiate favourable trade terms with the EU, the impact of a Brexit on Ireland could be a permanent loss of 3.1 percent of GDP by 2030.

Even the best case scenario for the Irish economy would lead to a permanent loss of 1.1 percent of Ireland's total GDP by 2030.

Taoiseach Enda Kenny addressed this issue, speaking after this morning's Cabinet meeting he said, "Ireland will, of course, remain a member of the European Union" as it is "profoundly" in our national interest.

"After more than 40 years of membership, we have built up strong bonds of partnership with all the other member states, and with the European institutions, that will continue to serve us well.

"There will be a discussion of the next steps at the meeting of the European Council next week.

"I will clearly set out our national position at that meeting, and I will ensure that our particular national interests are fully respected as we prepare to enter the next phase of negotiations," he continued.