Irish GDP At Risk Of 7% Setback Post-Brexit: Report
Ireland’s GDP could be held back by up to 7% in the case of a hard Brexit, according to a new report.
The UK’s exit from the EU will likely have a adverse effect on Irish economic growth if the negotiations lead to any of a range of trade paradigms, a report by Copenhagen Economics revealed.
Ireland & the Impacts of Brexit investigated the potential effects of a hard Brexit along the lines of six scenarios, including an EEA-type scenario, a customs union-type scenario, a free trade agreement (FTA) scenario and a worst case, WTO scenario. It was presented today by the Minister for Business, Enterprise & Innovation, Heather Humphreys, TD.
Humphreys and other Government Ministers, including Minister for Agriculture, Food and the Marine, Michael Creed, TD., and Minister for Finance & Public Expenditure and Reform, Paschal Donohoe, TD., discussed the report at the event with over 200 stakeholders in Croke Park.
The industry representatives came from the agri-food sector, pharma-chemicals, electrical machinery, wholesale & retail, and air transport, which collectively amount for 90% of the anticipated Brexit impact.
The report showed that Ireland is uniquely exposed to the risks of Brexit due to its trade intensity with the UK. It concluded that the Irish economy is expected to grow but Brexit is expected to have a dampening effect on that growth. Under a relationship such as the EEA type scenario, the impact of Brexit would be to dampen growth by 2.8%.
Meanwhile, a customs union or FTA scenarios could have a negative effect of 4.3% on the Irish GDP and a WTO scenario would even cause a 7% setback for the economy.
Exports and imports could be negatively affected too, again with the WTO framework being the worst-case scenario, at -7.7% and -8.2%, respectively.
The WTO scenario would see trade between the UK and the EU being governed by the WTO rules and other WTO agreements. In this case, the risk of regulatory divergence is higher than in all other scenarios, which would lead to higher tariffs and tougher border controls.
The agri-food sector was the most at risk of suffering as a result of Brexit, due to its reliance on exports to UK outlets, according to Michael Creed TD.
“The agri food sector is a critically important contributor to the overall economy and employment creation, particularly in rural Ireland,” said Creed, who took part in a panel discussion at the launch with heads of the Irish Pharmaceutical Healthcare Association, Retail Ireland, and the Irish Exporters Association.
“The Copenhagen Economics study confirms that the sector is the most acutely at risk from Brexit, given its significant reliance on UK market outlets,” Creed continued.
“My Department and its agencies will continue to work with the sector to prepare it for all eventualities, including through the introduction of measures to improve its competitiveness, by reducing cash flow pressures through the introduction of low cost finance, through the provision of advice on supply chain efficiencies and by investing in marketing and promotion to ensure that the sector has the widest possible global market footprint.”
Before the launch of the report, Food Drink Ireland, the Ibec group that represents the food and drink sector, called on the Government to allow for more state aid for the Irish agri-food and drinks sector, making them exempt from EU state aid rules, to offset the economic consequences of a hard Brexit.
© 2018 - Checkout Magazine by Kevin Duggan