Business Brexit

Tuesday 16 July 2019

No-deal Brexit would knock 4.25 percentage points off Irish GDP - Paschal Donohoe

Finance Minister Paschal Donohoe
Finance Minister Paschal Donohoe
Gavin McLoughlin

Gavin McLoughlin

A no-deal Brexit would knock 4.25 percentage points off Irish GDP, Finance Minister Paschal Donohoe has said.

It could also lift the unemployment rate by two percentage points.

Weaker sterling and trade disruption would hit our exports, and domestic spending would be lower due to higher prices, uncertainty, and extra saving.

The figures are based on research carried out by the Department of Finance. Though they believe the economy will continue to grow in the event of a no-deal Brexit, it would be at a slower pace.

For example – if they were projecting 6pc growth at the moment over the medium term– that would be revised down to 1.75pc.

"There remains considerable uncertainty surrounding the format the UK’s exit from the EU will take.  The assessment by my Department shows that a disorderly exit would be particularly severe," Mr Donohoe said.

"The level of economic activity will be around 4.25 percentage points lower than our existing trajectory over the medium-term.  This aggregate figure hides an even larger hit to economic activity in labour-intensive sectors such as agri-food and indigenous small and medium-sized enterprises.

"Further, given Ireland’s unique macroeconomic and sectoral exposures to the UK these impacts would be disproportionate relative to the rest of the EU. It is important to recognise that such estimates may not capture the full impact, and the figures may be conservative. 

"Nevertheless, quantifying the impact is important to help Government understand the possible macroeconomic implications and to design the appropriate policy response."

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