Economic impact of hard Brexit could rival financial crash

A new report suggests the Irish economy will be reduced by between 2.8% and 7%

Economic impact of hard Brexit could rival financial crash

File photo of Irish and European Union flags | Image: Niall Carson/PA Wire/PA Images

A new report has suggested that Brexit could be as bad for Ireland as the economic crash.

The study, undertaken by Copenhagen Economics on behalf of the Government, warns that the impact could equal the financial crisis of 2008 to 2009 - but last even longer.

It warned that, depending on the type of Brexit that emerges, the economy will be between 2.8% and 7% smaller than it would have been if the UK remained within the bloc.

The Copenhagen Economics report estimates that by 2030 - if there is a hard Brexit - the Irish economy will be 7% smaller than its likely size had Britain remained in the bloc.

The same scenario would see Irish GDP at 2.1% lower than it would have been by 2020. 

The report has been circulated by ministers and will be examined by Cabinet this week:

Fianna Fail's Brexit Spokesperson says the Government must 'stop dithering' over its response to what lies ahead:

“Fianna Fáil has supported the Government’s international efforts on Brexit but domestically the Government has done next to nothing,” he said.

“We have a report which is now going to be seen by the Cabinet early this week showing the potentially catastrophic effects.”

He said the worst-case no-deal scenario could have catastrophic effects on a range of Irish industries:

“The domestic response; getting our businesses ready - our fishing community, our farming community, our agri-food and tourism sectors,” he said.

“All of these sectors are going to need serious help.

“We have seen very, very little from Government so far except for websites, questionnaires and meetings.

“We need to see real action on the ground now.”

Border

Speaking on Friday, chief EU Brexit negotiator Michel Barnier warned that border checks with the North will be "unavoidable" if the UK leaves the single market and customs union.

Mr Barnier also said that a transition period for the UK of around two years when it leaves the EU in March 2019 is "not a given."

Mr Donnelly warned that no transition period would be “incredibly damaging to Ireland” adding that obviously “no border of any description can be countenanced around the six counties, so the stakes are very high.”

Stormont talks

The Taoiseach will meet the British Prime Minister in Belfast later in an effort to progress talks on forming a Government in the North.

It is the first time the two leaders have met in Northern Ireland.

The leaders will meet with the five main Stormont parties in the hopes of making a breakthrough in the deadlock that has left the north without an executive for over a year.

Sinn Féin’s new president Mary Lou McDonald will attend the talks.

Speaking over the weekend, she said Brexit has created new divisions in the six counties:

“Brexit is an absolute disaster,” she said.

“Brexit and the Good Friday Agreement are mutually incompatible; it is as simple as that and if I am honest I sense a real resentment amongst Irish people that Ireland potentially becomes the collateral damage in a power play between the Tories and London.”

Theresa May is set to is preparing to re-launch her Government's strategy on Brexit in a series of speeches over the coming weeks.