Hard Brexit would cost Irish economy €18bn, says study

Britain’s departure from the EU will hit the Irish economy more than any other country in Europe, with a hard Brexit costing the country about €18bn (£16bn), a new study has found.

The Irish minister for business, Heather Humphreys, said it was clear that her country would be the most “Brexit-impacted” country in the EU.

But she said the findings would help the state prepare policy adjustments to mitigate the exposure.

The study is the second major report commissioned by the government on the potential effects of Brexit since 2015 and analysed 24 sectors of the Irish economy.

It found that five sectors – agri-food, pharma, electrical machinery, wholesale and retail and air transport – accounted for approximately 90% of the total economic impact.

“I think it is fair to say that the report from Copenhagen Economics makes for stark reading,” said Humphreys.

The report found that Brexit will hit the Irish economy no matter what type of deal is signed between London and Brussels.

Agriculture is one of the most exposed sectors, with large exports of food and drink ranging from cheddar cheese, beef and mushrooms to Guinness and powdered milk.

Ireland’s minister for agriculture, Michael Creed, said his sector would be “most acutely at risk from Brexit” because of its “significant reliance on UK market outlets”.

The report estimates that the UK’s departure from the EU will cause the value of output from key parts of the agri-food sector to decline by 10% to 20% by 2030.

The research compared four possible Brexit outcomes to the status quo of Britain remaining in the EU.

The worst-case scenario of a no-deal exit would result in Britain falling back on World Trade Organisation rules, amounting to a 7% hit to Ireland’s GDP by 2030, according to the study.

Such a blow would cost the country’s economy €18bn, with Ireland’s annual growth slashed from 2.2% to 1.7%.

Britain joining the European Economic Area (EEA), often cited as the Norway model, would be the best scenario with a 2.8% hit to Ireland’s GDP as duty-free trade would continue on most products.

Humphreys said the study would be used to help “Brexit-proof” the economy with some important steps having already been taken to cushion businesses with a €300m loan scheme for small business and a “Brexit response” fund for agriculture set up.