Irish economy braces for foot-and-mouth impact

The Irish economy is bracing itself for the economic impact of an outbreak of foot-and-mouth disease.

The Irish economy is bracing itself for the economic impact of an outbreak of foot-and-mouth disease.

"Consumer confidence will be dented, especially in rural and farming communities. But the big issue is how it feeds through to the urban communities. That is much more difficult to predict," said Mr Alan McQuaid, economist at Bloxham stockbrokers.

He said combined losses from reduced export revenues and knock-on effects for tourism and related industries could chop between 0.5 and 1.5 per cent points off Ireland's gross domestic product (GDP).

The Government immediately suspended all exports of animal products following confirmation of the outbreak, and extended an existing ban on the export of live animals.

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Although designed to halt the international spread of the disease, the move could threaten the jobs of many of the 40,000 people working in the food and agriculture industry, which is already suffering the effects of Europe's recent mad cow disease scare.

The Irish Hoteliers Federation warned earlier this month that 20,000 jobs in the tourism industry were already at risk because of heavily depressed visitor numbers as people stayed away for fear of spreading the disease.

The food and farming industry accounts for 10 per cent of Irish GDP, 11 per cent of employment, and 27 per cent of net earnings from trade.

Food and live animal exports were valued at £5 billion last year or around 10 per cent of Ireland's total exports.

"Ireland exports roughly 90 per cent of the food it produces and I estimate 75 per cent of those exports would be affected by bans imposed by other European countries," Mr Jim Power, chief economist at Friends First in Dublin said earlier this month.

The outbreak was clearly grim news for Ireland's farmers, but Mr McQuaid said an even greater economic threat to Ireland came from a slowdown in the US economy.

He added that December's controversial budget, which drew criticism from Brussels for pumping £2 billion into an already roaring economy, might now prove invaluable by getting consumers to dig deeper into their pockets and counteract the impact from the disease.