Dr. Thomas Conefrey:

In our pre-budget statement we included some analysis of the possible effects of Brexit on Irish growth. Numerous studies have been carried out by the Central Bank and the ESRI. In most of the studies, the key effect they take account of is the conventional trade impact. For example, if there was a reduction in growth in the UK, then it would reduce demand for Irish exports. That is the main channel they take account of when looking at the possible effect of something like Brexit.

In that analysis, we also took into account the possible effect of uncertainty on Irish growth. It is also the case that on top of the negative trade effect, growth in Ireland could be reduced because of Brexit and due to the effect of uncertainty on business investment and consumer confidence. That gave us a slightly higher impact than some of the other studies I mentioned with regard to what it may do to GDP growth. The effect for 2017 would be to knock about 0.75 percentage points off growth and around 0.3 or 0.4 percentage points thereafter, which is a little higher than some of the other estimates that were around at the time, mainly due to the fact that we have tried to take account of some of factors that Deputy Ryan mentioned. It is the case that there is much uncertainty around the possible magnitude of those factors. The reason the studies focus on elements such as the trade effect is that one can come up with some sort of reasonable estimate of what the effect on exports might be. The effect of higher uncertainty in the UK on consumer spending in Ireland or on business investment is, obviously, much more difficult to capture, but it remains a likely important effect.