Dr. Mark Cassidy:

We expect to see an increase in foreign direct investment, particularly over the medium term. We think this will be one of the mitigating effects which will somewhat reduce the longer-term impact of Brexit. The reason is that all of the foreign direct investment that locates here does so to sell goods and services outside of Ireland. Much of that activity is undertaken to sell to EU markets. Around 40% of our exports are to non-UK EU countries. Once the UK is no longer part of the EU, international firms will have less incentive to locate in the UK with a view to selling into the Single Market and the EU. If they are looking for alternative locations, Ireland may be the optimum location. We may see foreign direct investment that is currently in the UK being redirected here. New investment seeking to locate in the EU, which previously might have considered the UK as a prime option, may instead come to Ireland. We expect to see an increase in FDI. We are already seeing very tangible signs of that in the financial sector. There is a good reason for that. Firms in the financial sector need to get authorisation in order to locate. Financial services sector firms need to make their plans much earlier than those in many other sectors. Therefore, as I have mentioned already, we have seen a very large increase in authorisation applications for the financial services sector and we will see significant new investments in that sector.

Outside of the financial services sector we expect to see a positive impact. The extent of that is still a little uncertain. It will take a little bit longer. Firms probably have more capacity to wait and see what exactly the nature of the new arrangements will be before they make definitive plans. We do not have estimates of the positive impacts on growth, but I have seen estimates projecting an increase of about 3% in output because of higher foreign direct investment over the medium to long term.