16 Jan 2020 | 09.38 am
UK Trade Deal Could Halve Brexit Impact
Copenhagen Economics analysis of UK Brexit talks
16 Jan 2020 | 09.38 am
A study of the impact of Brexit commissioned by the government indicates that concluding a comprehensive free trade agreement with Britain could halve the negative effect on Ireland’s economy.
The report, prepared by Copenhagen Economics, reflects the trade provisions of the Revised Political Declaration for the Future Relationship between the EU and the UK, which sets out the intent of both countries to negotiate a free trade agreement to replace the present economic relationship.
An analysis published by the Department of Business, Enterprise and Innovation in 2018 found that the economic impact on Ireland of a worst-case Brexit scenario — trading with the UK based on WTO rules — would reduce Ireland’s projected annual growth rate and result in GDP being approximately 7% lower in 2030 — the economy would grow, but at a slower rate.
The Copenhagen study, based on the provisions of the political declaration, points to a reduction in GDP of between 3.2% and 3.9% in 2030 from the no-impact scenario. Effectively, implementing a good trade agreement with the minimum of customs procedures could reduce the level of harm to the Irish economy by half.
Minister Heather Humphreys (pictured) said: “We have always known that Brexit in any form will have a negative impact on Ireland. Nevertheless, it’s important to say that it will not cause a contraction in the economy. The economy will still grow, but our estimates show that it will grow 3.2% to 3.9% less than it would have done if Brexit had not occurred.
“We have achieved our core objectives of ensuring no hard border between North and South, protecting the Good Friday Agreement, and safeguarding the Single Market as well as our place in it, but we are now heading into complex negotiations on the future trading relationship.
“It would be a mistake to underestimate how challenging that process will be, so I am strongly encouraging businesses to continue with their preparations in the coming period. There is nothing good in Brexit for Ireland so I would urge firms to take full advantage of government supports.”
Apart from the saving graces resulting from a free trade deal, new opportunities under recent EU FTAs, such as those with South Korea, Canada, Mexico and Japan, could further mitigate the impact from Brexit.
The full study, which examines the effect of four different scenarios and their impact by sector, is available here from Copenhagen Economics.