Michael Noonan (Limerick City, Fine Gael) | Oireachtas source

If there was never a Brexit, the economy would still be slowing down somewhat now towards a sustainable growth rate. When one comes out of a recession, there is a lot of spare capacity in an economy. When it begins to improve, growth rates are beyond the sustainable growth rate. When there is such spare capacity in the economy it grows more rapidly than it would be expected to grow on average.

Now that it is settling back, that factor exists in any case. We predicted around budget time that our sustainable level of growth would be 3.25% or 3.5% out for the five years of the forecasting period. On top of that, we took 0.5% off the growth rates for 2017, directly because of Brexit. That was built into the Summer Economic Statement. We maintained that position at budget time.

There are figures published today by the European Commission showing a very marginal reduction of 0.1% for 2017, or a reduction from 3.6% to 3.5%, I believe. It is showing a similar increase for 2018. It is all very marginal, however, and effectively it is in agreement with the figures we have been working on running from the budget.

Apart from analysing the potential fallout, it is very hard to make provision until we know where the United Kingdom will land in regard to its future negotiations with the European Union. The analysis to which the Deputy referred considers what would happen under the Norwegian arrangement, the Swiss arrangement and the World Trade Organization arrangement. The World Trade Organization arrangement, with the bureaucracy and possible tariffs that would arise from it, is the most extreme. It is almost 4%. As the Deputy said, however, it is over 40 quarters - 40 quarters from the British exit. Therefore, it is about 12 years down the line. If one assumes a rate of 3% per year and compounds it for 12 years, there is probably an increase in GDP of approximately 40%. One takes almost 5% or 4% off that. That is the impact but it is considerable. The strongest impact is in the first five years rather than in the later period.

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