On the back of another strong year for the economy in 2018, growth in the first half of this year has moderated but remains positive with GDP growth of 6 ½ percent in year-on-year terms. Indeed as a barometer of how well our economy is performing, there is no story more positive than the one emanating from our labour market. The strong growth in employment over the last number of years has continued into this year, with total employment increasing by 63,100 (+2.8 per cent) in the first half of 2019. As a result, there are now 2.3 million people at work in Ireland.
Since the publication of my Department’s last set of macroeconomic projections published as part of the Stability Programme Update (SPU) 2019, the possibility that the UK will leave the EU without a deal has increased substantially. To reflect this, for budgetary purposes, the Government has decided to base Budget 2020 on the assumption of a 'no-deal' Brexit. As part of Budget 2020 my Department will publish updated macroeconomic forecasts which will be based on the assumption that the UK leaves the EU without a deal.
My Department and the Economic and Social Research Institute (ESRI) recently published an updated model-based assessment of the economic impacts of a no-deal Brexit on the Irish economy. The research found that in aggregate terms compared to a scenario in which the UK did not leave the EU the level of GDP would be 3 per cent lower after 5 years. Despite the negative impact of no-deal Brexit, the Irish economy is still expected to grow but at a slower pace as a consequence of Brexit.
As we chart our way forward through the uncertain times ahead, careful management of the public finances is needed. Indeed the best way to mitigate the risks facing that we face is to improve the resilience of the economy through competitiveness orientated policies and prudent management of the public finances.