Irish food trade could slide by one-third if EU and UK fail to cut deal

Ireland's food exports and imports could each drop by about a third if the European Union and United Kingdom fail to agree a future trade deal, according to a new London School of Economics report.

The report, Vulnerabilities of Supply Chains Post-Brexit, predicts Irish food exports will fall by 29.9 per cent and imports will decline by 33.6 per cent in the event there is no trade deal.

Declines are still expected if a free trade agreement is reached with the authors predicting that Ireland’s food exports will decline by 11.1 per cent and food imports will fall by 12.6 per cent under that scenario.

Researchers at the UK college said Ireland is "likely to be the most negative affected" on disruptions to food trade should no deal be agreed for the end of the transition period on December 31st.

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Irish food trade with the UK is most affected based on the fact that 43 per cent of all Irish food exports go to the UK. The country facing the next worst impact on food trade is Cyprus, but its decline in food exports are a fraction of Ireland's at 17 per cent under a no-deal scenario.

Spain, the Netherlands, Belgium and Denmark will also be affected but to a lesser extent.

Dairy hard hit

Dairy is one of the areas worst affected under a no-deal scenario with the researchers predicting that dairy exports from the EU to the UK will fall by 18 per cent under a free trade agreement and by 94 per cent under a no-deal scenario.

The academics said that modelling the changes on the impact on Irish imports and exports has been made more difficult by "the complexity of the Brexit withdrawal agreement on Northern Ireland given the interconnectedness between Ireland and Northern Ireland".

The report notes that “this is made more complicated” by UK government policy relating to the withdrawal agreement, a reference to Britain’s Internal Market Bill that paves the way for the withdrawal agreement to be breached on exports between Britain and Northern Ireland.

The researchers warned that the estimates for Ireland should be treated with extra caution.

Economist Nikhil Datta, one of the report’s authors, said a large proportion of trade between the Republic and the UK covered in the report was North-South trade on the island of Ireland and that if, in a no-deal scenario, the original withdrawal agreement respected the border being set in the Irish Sea, then the Republic’s trade would not be as badly affected.

“If the Border is between Northern Ireland and the Republic, there will be a large hit. If all the trade is predominantly staying on the island and the Border is on the Irish Sea, then the impact might not be as great,” he said.