26 02 2018

Ireland Publishes Study Of Brexit Trade Impact

The Irish Government has published a new study on the impact Brexit could have on trade, which warns that in a worst-case scenario, Ireland's GDP growth could be reduced by seven percent by 2030.

The Government commissioned the study by Copenhagen Economics to examine the implications of possible new barriers to trade which might emerge as a result of Brexit. The study considers a range of possible Brexit scenarios: a European Economic Area (EEA)-type scenario, a customs union-type scenario, and a free trade scenario, and a worst-case: a WTO rules based-scenario.

Researchers concluded that an EEA scenario would be the least damaging to Ireland, gradually reducing GDP growth by 2.8 percent by 2030. A WTO scenario would have the greatest impact, resulting in a reduction in GDP growth of seven percent by 2030. These respective scenarios would reduce Irish exports by 3.3 percent and 7.7 percent. The study also predicted that, in a WTO scenario, Irish real wages would fall by 8.7 percent.

According to the study, "Ireland is uniquely exposed to Brexit due to a very high trade intensity with the UK. Approximately 15 percent of Irish goods and services exports are destined to the UK. In certain sectors, the UK is an especially important market, such as, for example, the agri-food sector where around 40 percent of exports are destined for the UK. In addition, two-thirds of Irish exporters make use of the UK landbridge to access continental markets."

The study argued that the best possible trade negotiation outcome for Ireland would involve an agreement in which there were large quotas for agricultural products, low border costs, and no new tariffs.

Commenting on the study, Business Minister Heather Humphreys said: "The information will help to inform our negotiating position, together with our ongoing domestic response to Brexit, which has been evolving since the UK vote and will continue to evolve in the times ahead."

"Without a doubt, the study underlines the importance of a satisfactory transition period and exit deal. The Government is utterly determined to get the best possible deal for the Irish people, negotiating as part of the EU27, and in full support of [the] chief negotiator, Michel Barnier."