Dáil Éireann Debate, Thursday - 15 February 2018
180. Deputy Niall Collins asked the Minister for Business, Enterprise and Innovation if her Department has commissioned a report on potential growth and jobs opportunities that may arise from the UK’s decision to leave the European Union. [7984/18]
View answerAs part of the Government’s response to Brexit, the Department of Business, Enterprise and Innovation commissioned Copenhagen Economics to undertake a major study into the implications of Brexit for the Irish economy and trade. I have just published the output from this independent research in a report entitled "Ireland and the Impact of Brexit: Strategic Implications for Ireland Arising from Changing EU-UK Trading Relations". This research project adds to an already extensive evidence base that underpins the ongoing development of our response to Brexit.
Using a computable general equilibrium (CGE) model, this study quantifies the impact on the economy of possible new barriers to trade in goods and services which might emerge as a result of Brexit. This provides an evidence base on key trade and investment questions to inform Ireland’s position as part of the wider negotiation on the UK’s future relationship with the EU. It will also help to inform domestic policy responses and measures necessary to mitigate risks and maximise opportunities arising as a result of Brexit.
The study models for a range of short and long term impacts of Brexit on key economic metrics, including GDP, exports, imports and wage rates. The main focus of the study is on the long term to show the possible impact of four Brexit scenarios in a putative “year 2030”. All results are compared against a 2030 baseline which would have pertained had Brexit not occurred. These scenarios are:
- An EEA-type scenario
- A Customs Union scenario
- A Free Trade Agreement
- A (worst-case) WTO scenario
All of the scenarios examined produce a result that is less favourable than a non-Brexit scenario. Nevertheless, regardless of the scenario, the Irish economy is still expected to record strong, positive growth out to 2030 – Brexit has a dampening impact, however, resulting in a lower growth rate than would otherwise have occurred.
The study points to the fact that negotiating the best possible outcome will be the most effective mitigation measure in terms of limiting the damage of Brexit to Ireland. It also identifies the importance of progressing EU FTAs with other key trading partners.
Copenhagen Economics find that while the overall impact of Brexit will be negative for Ireland, there are certain opportunities arising from these changes. Copenhagen Economic grouped these opportunities into three categories: Trade, talent and investment.
As a result of Brexit, UK exporters will face new barriers in the EU market. This implies that UK products or services will be more expensive in the EU market, meaning that customers in other EU countries currently served by UK firms will be looking for alternative suppliers. This can present opportunities for Irish exporters, especially since there are many overlaps in the products export from the UK and from Ireland.
In terms of talent, the expected decline in economic activity in the UK following Brexit and in particular the uncertainty and sentiment of EU citizens in the UK presents another opportunity for Ireland. As the only English speaking country in the EU, aside from Malta, and with diverse job opportunities, Ireland can become a new home for talents deciding to leave the UK post-Brexit. This would particularly relevant in sectors and positions where there are already shortages in Ireland. This could include IT-specialists, researchers, financial service expert for example.
Copenhagen Economics find that the biggest opportunities in relation to Brexit arise from increased foreign direct investment (FDI). Our country’s attractiveness to overseas companies is well-documented and will likely increase on account of the UK’s withdrawal from the European Union, as some firms consider alternative locations for future investment. Ireland has, in fact, already seen both increased investment and interest from multinational businesses – particularly in the financial services sector – in the wake of the EU-UK referendum result and further Brexit-related FDI is expected in the time ahead.
IDA Ireland continues to identify potential for mobile FDI in key sectors and actively pursue these opportunities including through targeted trade missions and rollout of advertising campaigns to promote Ireland’s offering particularly in talent and tax.
Overall, this independent research complements the Department’s recently published “Building Stronger Business” report which summarises the policy measures that DBEI has already taken, those that are planned and the Departmental structural reforms put in place to ensure that we can work as efficiently and effectively as possible to support our companies.
