Hard Brexit would have ‘severe impact’ on every part of Irish economy

Government document sets out threat to Ireland in no-deal Brexit scenario

A no-deal Brexit will have "severe macroeconomic and trade impacts" which will involve "difficult and significant choices" for the Government, according to a document published by the Government last night which lays out in stark terms the threat to Ireland in the coming months.

In a document that echoes challenges faced during the bailout, officials warn that a hard Brexit next March would “impact every element of economic functionality: trade flows, supply chains, economic and business operations, the labour market, consumer confidence and spending”.

It says a British crash out of the EU next March without an agreement would have a “very significant adverse economic and social impact” in the UK and “Ireland would also suffer considerably in that context”.

Officials briefed the media and opposition politicians on the document last night at Government Buildings. It says a no-deal Brexit represents an “exceptional economic event which will be met with exceptional measures to support the continued operation of the Irish economy and our international trading links”.


Although the Taoiseach has said that an emergency budget will not be required, the document says an increase in exchequer borrowing “and other measures” might be required.

It says there would be particular pressures on certain sectors of the economy, naming “agri-food, fisheries, aviation and road transport, pharma-chemicals, electrical machinery, retail and wholesale business”.

Smaller businesses

It says the economic impact is likely to be greater in the Border region and on smaller businesses that trade with the UK.

The primary channel through which Brexit’s economic effects would emerge is through application of World Trade Organisation tariffs and regulatory divergence, the document says. And it warns that these could “affect supply chains and the cost and/or availability of imports from the UK”.

A further fall in sterling would hit the competitiveness of Irish business, it says, while an influx of UK migrants could result in “pressure on labour markets and housing markets and public services”.

Some 45 legislative measures, including 21 pieces of primary legislation will need to be passed in the coming months.

Though the document details significant amounts of planning, it is sketchy on specifics in some areas. There is no detail, for example, on how supplies of vital medicines are to be maintained, though Tánaiste Simon Coveney last night insisted there was no danger of food or medicine shortages. Mr Coveney accepted that there is more detail required in many of the areas.

No-deal exit

Speaking at Government Buildings after the document was published last night, Mr Coveney said avoiding a hard border after a no-deal exit would be “a very difficult thing to do”, though he reiterated the Government’s insistence that no preparations would be made for a border. He also said, however, no preparations were being made to avoid a hard border in the event of a no-deal Brexit.

Meanwhile, in Brussels on Wednesday , the European Commission published a batch of papers about no-deal planning.

Among the commitments is a reaffirmation by the commission to continued funding of the EU peace programme in the northern Border counties until at least 2020.

The 14 measures published on Wednesday, in areas including citizens’ rights, air landing rights and safety, and the free movement of animals, will be taken unilaterally by the EU on condition that the UK reciprocates fully.

Pat Leahy

Pat Leahy

Pat Leahy is Political Editor of The Irish Times