Brexit could impact on 'nearly all aspects of Irish life', assessment warns

The paper also says there is uncertainty over US policies

Brexit could impact on 'nearly all aspects of Irish life', assessment warns

British Prime Minister Theresa May (right) with Taoiseach Leo Varadkar during a joint press conference at 10 Downing Street, London in June 2017 | Image: Philip Toscano/PA Wire/PA Images

The Government has published its National Risk Assessment for 2017.

The paper follows consultation on a draft paper that was published in June.

The assessment, the fourth of its kind, gives an opportunity to consider strategic risks that face the country over the medium and long term.

Changes since last year include the intensification of risks from external sources, including from the UK's withdrawal from the EU.

In a forward, An Taoiseach Leo Varadkar says the assessment acknowledges "the significance of risk" arising from Brexit, and that it represents an overarching theme that could have "far-reaching impacts on nearly all aspects of national life."

File photo

The paper says: "Brexit and possible changes to US trade and tax policy present risks to the performance of the Irish economy while ongoing internal risks include those posed by legacy issues and competitiveness pressures.

"Given its significance, climate change is included as a discrete risk this year, while human capital and skills needs are seen as issues of growing importance and the prominence of some technological risks has increased, including the potential for cyber-attacks or data fraud and theft to cause serious disruption."

"Other significant risks identified include those arising from continued housing supply constraints, changing demographics and potentially unrealistic expectations for public expenditure."

Brexit

On Brexit specifically, the assessment says depending on the ultimate outcome of the Brexit process, there are risks to the political and economic stability of Northern Ireland, including in relation to cross-border trade.

This includes a threat to the Common Travel Area, issues of trade with the UK and consequential damage to the Irish economy.

A number of other risks identified include:

  • risk that the loss of the UK undermines the EU's effectiveness as a global actor
  • risk of contagion whereby other member states decide to leave
  • risk of negotiations breaking down, causing divisions amongst member states - for example in relation to the EU budget
  • risk that the loss of the UK voice in EU decision-making could tip the balance of interests towards a more conservative stance

The assessment adds: "Ireland is uniquely vulnerable to serious negative consequences for the economy or significant sectors of it as a result of the UK leaving the EU, given the extent to which our economies are linked.

"UK trading relations are likely to be affected by Brexit, with a concurrent impact on Ireland.

"Trade impacts represent the primary channel through which Brexit’s economic effects will emerge, and it will likely lead to a fundamental restructuring of the trading framework in which Irish exporters operate.

"If the UK pursues trade agreements with third countries, this could present additional competitiveness challenges for Ireland’s traditional UK market suppliers."

And it says many of Brexit’s economic impacts will not emerge until after the UK’s exit takes place.

US

In relation to the US, the assessment suggests that country may be "pulling back from globalisation and free trade with a more protective outlook".

It says: "There is uncertainty regarding the direction of US polices on tax and trade, with potential to impact on Ireland given the significance of trade links between both countries, as well as the large presence of US multinationals in Ireland.

"In addition, there is uncertainty over the pace of any future changes to interest rate policy by the US Federal Reserve - in particular, how the global economy and financial markets may be impacted."

The National Risk Assessment is conducted annually by the Department of the Taoiseach.

Read it in full here