Brexit could damage the Irish economy almost as badly as the 2008-2009 financial crisis – but over a longer period, according to an economic study.
The study and economic modeling by Copenhagen Economics says a hard Brexit would shrink the Irish economy by between 2.8 per cent and 7 per cent by 2030 the size of the Irish economy in 2030. It modelled the assumed impacts on the Irish economy of the different types of Brexit.
The report predicts Ireland would continue to enjoy strong growth in the short to medium term but by 2030 the Irish economy could be as much as 7 per cent smaller than it would have been had Brexit never occurred. To put it into scale, the disastrous collapse of Ireland’s property market and banking industry a decade ago reduced the size of Ireland’s economy by 8 per cent.
The report modelled different types of hard Brexit: (1) A Norway-style European Economic Area (EEA) arrangement, with full access to the single market, limited tariffs/quotas on agri-food, with customs procedures, limited regulatory divergence and some restriction on services access (2) A Customs Union scenario with some tariffs and quotas, some customs procedures and some regulatory divergence; a free trade agreement with some tariffs/quotas on agri-food, significant customs procedures, some reduced market access for services and some regulatory divergence (3) A World Trade Organisation scenario, described as the “worst case” Brexit, involving tariffs and quotas on all goods, full customs procedures, significant regulatory divergence and significantly reduced market access for services.
It says the best outcome for Ireland – of these arrangements – would be the Norway-style EEA option.
It would shrink the Irish economy by just 2.8 per cent by 2030. Under this option Britain would enjoy access to the EU Single Market, observe EU rules and make a contribution to the EU budget.
This is also the option most likely to be resisted by Prime Minister Theresa May’s hard-line Brexiteers and Eurosceptics.
A customs union or free trade arrangement would shrink the Irish economy by 4.3 per cent by 2030.
The WTO option – no agreement between the EU and the UK as wells as tariffs and border controls would shrink the Irish economy by 7 per cent lower than it might otherwise have been.