Dáil Éireann Debate, Tuesday - 6 February 2018
134. Deputy Stephen S. Donnelly asked the Minister for Finance the estimated impact on Ireland of the reduction of economic growth in the United Kingdom by 5% for the next 15 years (details supplied); and if he will make a statement on the matter. [5425/18]
Amharc ar fhreagra135. Deputy Stephen S. Donnelly asked the Minister for Finance the estimated impact on Ireland of the reduction of economic growth in the United Kingdom by 8% for the next 15 years (details supplied); and if he will make a statement on the matter. [5426/18]
Amharc ar fhreagra136. Deputy Stephen S. Donnelly asked the Minister for Finance the estimated impact on Ireland of the reduction of economic growth in the United Kingdom by 2% for the next 15 years (details supplied); and if he will make a statement on the matter. [5427/18]
Amharc ar fhreagraI propose to take Questions Nos. 134 to 136, inclusive, together.
My Department has been to the fore in producing and funding a number of Brexit-related studies, both before and since the UK's referendum decision. In addition, regular updates of the Department’s Macro-Economic forecasts take account of the impact of Brexit. Published Brexit-related studies by my Department include:
- 'Scoping the Possible Economic Implications of Brexit on Ireland' – A scoping study of scenarios for the future relationship between the UK and the EU. Published under the Department of Finance-ESRI research programme in November 2015;
- ‘An Exposure Analysis of Sectors of the Irish Economy’. An in-depth analysis of the possible sectoral and regional impacts of Brexit arising from Ireland's trade relationship with the UK, published by Department of Finance in October 2016 (Updated March 2017);
- 'Modelling the Medium to Long Term Potential Macroeconomic Impact of Brexit on Ireland' - Published under the Department of Finance-ESRI research programme in November 2016; and
- ‘Trade Exposures of Sectors of the Irish Economy in a European Context’ – An analysis of trade exposure to the UK in comparison to other EU Member States, published by Department of Finance in September 2017.
All of these studies have been made public.
My Department's own published research shows that the potential impact of Brexit on the Irish economy is significant. The joint paper my Department published with the ESRI, assessed the medium to long term potential macroeconomic impact of Brexit on Ireland, under three scenarios, (i) an EEA type arrangement, (ii) an FTA agreement, and (iii) a WTO arrangement. The study shows that ten years after a UK exit from the EU, the level of Irish output, could reduce in a range from 2.3 per cent to 2.7 per cent and 3.8 per cent (i.e. under a EEA scenario, a FTA scenario and a WTO “hard Brexit” scenario, respectively), below a baseline of what it otherwise would have been. Most of the negative impact would occur in the first five years, under each scenario. These results are on a no policy change basis. To that extent, the results of the reported UK analysis show a similar impact to those identified for Ireland, with the EEA type arrangement showing the lowest impact, and the WTO arrangement showing the biggest impact.
In addition, to the three scenarios assessed in the 'Modelling the Medium to Long Term Potential Macroeconomic Impact of Brexit on Ireland' paper, simulations published in Budget 2018 (last October), show that a permanent reduction of 1 percent in the level of global output would reduce Irish output by 1.1 percent lower after 5 years, relative to a baseline projection. However, as we cannot control the international environment, it is crucially important that we prepare our economy for the challenges ahead.
In this context, the Government has already taken a number of important steps including in Budgets 2017 and 2018, the Action Plan for Jobs, Ireland Connected our Trade and Investment Strategy and the preparation of a new 10-year Capital Plan. The best way to deal with the uncertainties arising from Brexit is to continue the Government’s competitiveness oriented policies and prudent management of the public finances.
