Dáil Éireann Debate, Thursday - 26 November 2020
218. Deputy Bernard J. Durkan asked the Minister for Finance if, in the context of Brexit, the full extent of its negative impact on Ireland is fully recognised, appreciated and provided for in the short and medium terms; and if he will make a statement on the matter. [39467/20]
Amharc ar fhreagraMy Department has been to the fore in producing and funding a number of assessments of the extent of the economic impact of Brexit, looking at both the short and medium term impact of Brexit in different scenarios.
For example, joint research with the ESRI, published in March 2019, broadly captured the range of possible future relationships between the EU and the UK. Under these scenarios, over the medium-term (i.e. 5 years) the level of GDP would be between 2 and 3 1/4 per cent lower, compared to a situation where the UK remained in the EU.
More recently, and in light of developments related to COVID-19, joint research was undertaken by my Department and the ESRI examining the impact and interrelationship of Brexit and the pandemic on the short-term economic prospects. The research found a limited overlap in the sectors exposed to the respective shocks.
Further to this, joint analysis my Department and the ESRI published in the ESRI’s Autumn 2020 Quarterly Economic Commentary incorporated these findings to examine the impact of Brexit on the recovery path of the economy post COVID-19. The results were broadly in line with previous Department of Finance/ESRI analysis in 2019.
This research, and earlier analysis carried out and published by my Department identifying Ireland’s trade exposure relative to our EU partners in both exports and imports terms, show that Ireland is an outlier among EU member States in terms of our trade exposure in both goods and services to the UK.
In the context of the research outlined, Budget 2021 was based on the prudent assumption of a disorderly end to the transition period between the EU and the UK at the end of this year and the projected impact of that scenario.
Under this scenario, a decline in GDP of -2 ½ per cent is projected for this year, and growth of 1 ¾ per cent is expected in 2021; this is around three percentage points below a counterfactual scenario, where a trade deal between the euro area and UK is reached.
I include a list of the published research and joint research on Brexit by my Department for reference:
- Department of Finance and ESRI 2016. Modelling the Medium to Long Term Potential Macroeconomic Impact of Brexit on Ireland
- Department of Finance. UK EU Exit: Trade Exposures of Sectors of the Irish Economy in a European Context
- Department of Finance. 2018. UK EU Exit – An Exposure Analysis of Sectors of the Irish Economy.
- Department of Finance. 2018 Brexit: Analysis of Import Exposures in an EU Context.
- Department of Finance and ESRI. 2019. Ireland and Brexit: modelling the impact of deal and no-deal scenarios
- Department of Finance and ESRI. 2020. Examination of the sectoral overlap of COVID-19 and Brexit shocks
- Department of Finance. 2020. Trade Costs and Irish Goods Exports
