Ireland will be ‘second biggest losers’ if UK leaves EU – Donohoe

Minister for Finance Paschal Donohoe has said Ireland will be the "second biggest losers" if the UK leaves the European Union without a deal on October 31st.

Mr Donohoe said the UK would be “the biggest losers” but Ireland would also be impacted “given the level of interconnectivity that exists between the two islands”.

“The projections of my own Department of Finance indicate that the real output of the Irish economy would be of a magnitude of five percentage points lower than it otherwise would be,” he said.

“This would affect domestic demands, it would affect our public finances and most importantly it would affect employment levels within our economy.”

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Mr Donohoe was speaking at the Congress of the European Federation of Public Service Unions (EPSU) conference in the RDS in Dublin on Thursday.

Mr Donohoe said the structure of the Irish economy will undergo “profound change” in the coming decades and that a revolution in robotics, automation and artificial intelligence will transform the labour market.

“It means some job roles might disappear, it means others will be redefined, it means brand new jobs will be created. Many of today’s school children will be employed jobs in industries that have yet to be created,” he said.

“And while this ongoing debate about the scale and timing of automation’s impact in the workplace, it’s generally I believe accepted and acknowledged that technology will significantly alter many occupations and create new ones which will need new skills.”

Mr Donohoe said the best way to mitigate against risks posed by Brexit, climate change and automation is to look at how the resilience of the economy can be improved through “higher productivity”.

“This indicator is widely regarded as one of the most important in economics given that a country’s ability to increase its living standards over time depend almost entirely on its ability to improve its output per worker, in other words its productivity level,” he said.

Mr Donohoe said productivity is one of the “key pillars” of the Government’s Future Jobs Ireland policy. He noted that the OECD’s most recent economic survey of Ireland stated that in order to further raise living standards, “we must raise the productivity level of Irish firms”.

“CSO data published last year showed that between 2000 and 2016, internally dominated sectors in Ireland experience productivity growth of more than four times that recorded in sectors led by domestically orientated companies,” he added.

“This isn’t uncommon but it’s particularly pronounced in Ireland and the resilience of our economy could well depend on how we unlock that relationship.”

Mr Donohoe said average weekly wages have now increased by about €100 or 14 per cent since the third quarter of 2014.