Professor Peter Clinch:

Brexit is obviously one of the major challenges that we are facing but it is not the only challenge. It is important to say that there are developments at EU level and also in the US that are also critical, so perhaps those items may be considered together in how we respond to what are general broad international challenges. In recent years we have been performing very well relative to the UK in our international partners. One of the key issues are the short-term and long-term implications that it has across a range of areas, including trade and investment, the labour market, energy as well as a many of these sectoral competitiveness impacts. Clearly where the biggest threats arise are in the agrifood, financial and tourism sectors, which are very employment intensive sectors. That is a big concern as well as political concerns around the border. Bord Bia's report that €570 million was lost in the value of food exports last year is an immediate example of what uncertainty around Brexit does but also reflects the change in the exchange rates.

Probably what is best to look at is how do we compare with the UK in terms of competitiveness. The Competitiveness Council is undertaking an exercise to do that and I will give the committee some broad indicators. In comparison with the UK, we have a similar performance in the rankings with respect to the quality of our institutions, of government, the quality of higher education and training, the efficiency of product markets, but relative to Ireland the UK has a very large market size and much higher rankings in terms of its macroeconomic environment. Our infrastructure ranks poorly. The UK is stronger in financial market developments, in labour market efficiency, technological development, innovation and business sophistication.

One of the key things that we need to look at is labour market functioning. As an example of the sorts of threats that we could have from Brexit, the UK scores much more highly on labour market efficiency. What we would be concerned about is where the British Government moves in its policies that would increase the UK's competitiveness relative to Ireland. Having said that, there are also potential advantages from Brexit, particularly in terms of financial services and increased foreign direct investment. The other area of particular concern is taxation. The Competitiveness Council is essentially doing an exercise examining these comparators with the UK. To answer Deputy Calleary's question about how Ireland is responding to Brexit as a nation, it is quite obvious that a lot is going on in individual Departments. Where we need to place greater emphasis is if it was a company facing into this particular difficulty, we would be examining, for example, where to place our expenditure in response to what is a structural shift in the market. The medium review of our capital development plan is an opportunity to see whether we are placing our investments where they ought to be.