Dáil Éireann Debate, Wednesday - 17 April 2019
83. Deputy Michael Moynihan asked the Minister for Finance if he or his officials have discussed the latest ESRI special article on Brexit published 26 March 2019; and its implications for the island of Ireland (details supplied). [16721/19]
View answerBoth my officials and I have discussed the recent joint ESRI and Department of Finance study of the potential macro-economic impacts of Brexit on the Irish economy.
The research does not examine the implications of Brexit on an all-island basis. As the UK Government and other research institutes have assessed, Brexit will have a negative economic impact on the UK economy and the Northern Ireland economy in particular. The all-island economy is a matter for my colleague, the Minister for Business, Enterprise and Innovation.
In terms of the joint ESRI and Department of Finance research, a range of alternative scenarios were considered given the uncertainty surrounding Brexit. The study finds that, compared to a no Brexit baseline, the level of GDP in Ireland ten years after Brexit would be around 2.6 per cent lower in a Deal scenario and 5.0 per cent lower in a Disorderly No-Deal scenario respectively. This assessment shows that all Brexit scenarios will imply a slower pace of growth with negative consequences throughout the economy.
This slower growth will have a negative impact on the labour market. Employment is still forecast to continue growing – but at a slower pace than would be the case under a no Brexit scenario.
The general government balance would worsen by an average of ½ a percentage point of GDP over the medium-term, and by nearly 1 per cent over the long-term, in the disorderly no-deal Brexit scenario. The deterioration in the fiscal balance would be structural, not cyclical in nature. This would reflect a permanent reduction in the size of the economy and consequently in the amount of tax revenue it generates. The implications of this will be considered as part of the Budgetary cycle.
It is important to recognise that such estimates may not capture the full impact, and the figures may be conservative. Indeed, the impact in certain exposed sectors and regions will be worse than the average.
The Government has also taken important steps to prepare our economy, including through dedicated measures announced in Budgets 2017, 2018 and 2019. We will continue to strengthen the resilience of the economy, to maximise opportunities and to prepare our economy for the challenges of Brexit.
