Wednesday 18 September 2019

Rural areas 'could face calamity even as capital grows'

Professor Neil Gibson, chief economist for EY Ireland
Professor Neil Gibson, chief economist for EY Ireland

Shawn Pogatchnik

Swathes of rural Ireland could be plunged into effective recession in the event of a no-deal Brexit, even while the economy in the rest of the country continues to grow, according to a leading accountancy firm.

EY's chief economist Neil Gibson told the Irish Independent Brexit in any form will produce economic disruption and, in turn, winners and losers.

He said the winners would be concentrated in urban Ireland, while rural communities dependent on agri-food exports to Britain could face economic calamity without emergency Government aid or rapid negotiation of a free-trade deal.

He spoke as EY published its quarterly 'Economic Eye' report with a forecast that, in event of a UK crash-out from the EU on October 31, Ireland's economy as measured in gross domestic product (GDP) still would grow by 3.2pc this year and 1.3pc next year.

But when asked to break down those headline figures by capital versus countryside, Mr Gibson said following a no-deal Brexit Dublin might still manage 4pc growth or more while many rural communities could experience a 2pc fall.

However, those rural communities where the main employer is dependent on UK trade could fare even worse.

"The engines of the economy would keep firing in Dublin even following a no-deal Brexit. Unquestionably other locations within Ireland would face real recessionary pressures," he said.

"As economists we might say, 'Oh, the aggregate GDP of Ireland will avoid recession and firms are very adaptable and there'll be winners'. But if you're that farm in that village whose only customer is in the UK, and you're faced with tariffs and you go out of business, obviously that will devastate your family and your community.

"As economists we write reports and speak about aggregate numbers. Behind every one of those numbers is a family, a firm, a community. This disruption we foresee in event of a no-deal Brexit, at a human level, can be pretty brutal."

He noted that EY forecasts Northern Ireland will slide into recession next year in the event of a no-deal Brexit.

However, Mr Gibson said there is one potential silver lining.

If farms and agri-food firms in Ireland and the UK both suffer in the wake of a no-deal Brexit, this shared pain could focus minds in Dublin, London and Belfast on negotiating a free-trade agreement more quickly.

"A no deal doesn't mean it's forever," he said. "If both sides agree a particular industry has been devastated by Brexit, tariff schedules can be changed quickly."

Irish Independent

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