In March 2019, the Department of Finance and the ESRI published a comprehensive assessment of the potential macroeconomic impact of Brexit on the Irish economy.
This report shows that compared to a baseline in which there is no Brexit, 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. This assessment shows that all Brexit scenarios will imply a slower pace of growth with negative consequences throughout the economy.
The lower growth outlook would have implications for the labour market and Government finances. The negative impacts will be most keenly felt in those sectors with strong export ties to the UK market along with their suppliers. The impact will be particularly noticeable in the regions.
The March 2019 Department of Finance and ESRI assessment referred to estimates of the impact of a no deal Brexit on import and export levels based on a range of other factors including tariffs and non-tariff measures. Those estimates suggested that Irish exports would be reduced by 4.6% in a deal scenario and 8.3% in a disorderly no deal scenario after ten years. Imports would be reduced by 4.5% in a deal scenario and 8.2% in a disorderly no deal scenario after ten years. These estimates do not take account of mitigation measures taken by the Government and the relevant business sectors.
However, the Government has already taken significant action to get Ireland Brexit ready. Since the UK referendum, all of our national Budgets have been framed to prepare for the challenge of Brexit with dedicated measures announced in Budgets 2017, 2018 and 2019.
At the same time, we have prioritised mitigation measures by building up the resilience of the economy and the public finances, so that we have the capacity to deal with an adverse economic shock. We have set aside €1.5 billion in a Rainy Day Fund. We are supporting our companies to prepare for Brexit, to diversify their markets and supply chains, to develop new skills and to explore new opportunities.
The Government will continue to work to strengthen the resilience of the economy, to maximise opportunities and to prepare our economy for the challenges of Brexit, including through the Ireland Connected Trade and Investment Strategy, the 10-year National Development Plan and Future Jobs Ireland 2019.
In that context, it is important to recall that work underway across Government and sectors is focused on mitigating the worst impacts of Brexit, but that there will be serious impacts across a range of sectors in Ireland in a no deal Brexit scenario.