A 'no-deal' Brexit would hammer the Irish economy and wipe billions from its GDP
Matthias Hangst/Getty Images
- If the UK does leave the EU without a trade deal, then Ireland could be one of the worst affected countries, says Oxford Economics.
- It shares a land border with the UK and trades heavily with its closest neighbor.
- Oxford Economics says that long term, 2% to 2.5% of GDP could be wiped from the Irish economy.
- View Markets Insider's homepage for more stories.
Ireland's economy would be among the worst-hit victims if the UK crashes out of the European Union without a deal, according to Oxford Economics.The Irish economy, which is heavily tied to that of the UK, could lose 2% to 2.5% in the long term because of Brexit, due to the losses in trade.Advertisement
UK Prime Minister Boris Johnson on Wednesday suspended parliament in the run-up to Britain's deadline to leave the EU. The move raises the risk of a Britain leaving the EU without a deal to 30%, Oxford Economics said in its report.
Ireland is the only country that shares a land border with the UK, and the two trade heavily through the border of Northern Ireland as well as through ports in England and Wales.Oxford Economics predicts that if the UK left the EU without a deal, "by 2030, the Irish economy would be 2% to 2.5% smaller."
For Ireland, "the UK accounts for over half of Irish exports and over 40% of imports," in terms of weight, Martin Beck, lead UK economist at Oxford Economics, said in the note.See More: Here are 3 big reasons why Germany's economy is flopping - and why recession could be around the cornerCross-border goods trade with Northern Ireland in 2018 was around €3.5 billion ($3.87 billion), the economist said.Advertisement
"This represented one-tenth of Ireland-UK goods trade, with Northern Ireland trade heavily concentrated in a small number of sectors, notably agri-food," said Beck.
"Given that the shortest sea crossings from Ireland are to the UK, the UK is also important for transit traffic to and from Ireland," he said. More than half of Irish exports by volume with all non-UK markets is estimated to be transported via the UK, he added."Were new customs requirements to result in congestion in UK ports, Irish trade with the world could suffer," Beck said in his note.Advertisement
Much of the trade between Ireland and the UK involves food and drinks, which made up 31% of exports to the UK in 2018, according to Beck.
In a no-deal Brexit, he said, "Irish GDP would be around 1.5% lower by the end of 2021 compared to our baseline forecast."Beck also noted that the importance of the UK to Ireland has declined.Advertisement
"In 1973, when Ireland and the UK joined the European Economic Community, the UK accounted for 54.8% of Irish goods exports and 50.1% of imports. In 2018, those shares were 11.4% and 21.7%, respectively."
He added also that foreign firms may look to relocate into Ireland if there were barriers to trade after Brexit and foreign direct investment would increase by 7%.Our Brexit Insider Facebook group is the best place for up-to-date news and analysis about Britain's departure from the EU, direct from Business Insider's political reporters. Join here.Advertisement
- Chinese-firm backed Gland Pharma files for IPO, could raise up to ₹6,000 crore
- Constable who was in car transporting gangster Vikas Dubey from Ujjain tests positive for COVID-19
- Govt updates self-declaration form for passengers as COVID-19 recovery improves
- Bachchan, son Abhishek 'feeling better' after COVID-19 diagnosis, BMC to sanitise their bungalows
- Anupam Kher's mother, brother test positive for COVID-19