Dr. Tom McDonnell:

In terms of the economic impact, thus far it has been minimal at a macroeconomic level. Notwithstanding any impact on agrifood, goods trade in food and live animals to Great Britain was down €217 million, or 5.5%, in 2016, which is quite significant. If one strips out machinery and transport equipment, goods trade with the UK was down only 1% in 2016. NERI is tasked with identifying major swings one way or the other. Because there is so much uncertainty associated with the upcoming negotiations, it is difficult for somebody like me to make hard forecasts in terms of what is likely to happen. It is difficult to foresee anything other than an extremely hard Brexit. The negotiations are likely to fail and go badly. As that happens, which will be, probably, in late 2017 to early 2018, we will start to see an impact on the economy. If the trade barriers go up in 2019, as appears likely, that is what I would identify as the most risky in terms of a potentially large negative shock to the economy, as a level effect. It should not affect growth levels in subsequent years but there could be a fall in that one year and there could be chaos for Irish exporters for a period as the uncertainty continues and new markets are sought.

The increased uncertainty associated with all of this is a disincentive to investment because companies cannot be assured about access to markets and so on. This will put downward pressure on growth up to, and potentially beyond, 2019. However, this is all happening in the context of an economy that is still benefitting from pent up demand, rising employment and rising disposable incomes. We are at least coming to it in a reasonably strong space.