Christopher O'Sullivan (Cork South West, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

356. To ask the Minister for Finance his assessment of the impact on the Irish economy of the EU – UK Trade agreement announced on 24 December 2020. [1871/21]

Paschal Donohoe (Dublin Central, Fine Gael)
Link to this: Individually | In context | Oireachtas source

My Department has been to the fore in producing number of assessments on the economic impact of Brexit.

Research commenced before the Brexit vote in 2016, and continued following the referendum with analysis on the overall macroeconomic impact, as well as analysis at a sectoral level.

Joint analyses by my Department and the Economic Social Research Institute (ESRI) modelling the macroeconomic impact of Brexit were published in 2016 and 2019. The analyses covered a range of outcomes and possible future relationships between the EU and the UK.

The analyses included a limited Free Trade Agreement (FTA) based on zero tariffs and zero quotas on the goods side with very little covered in respect of services. Overall this is broadly in line with the recently concluded new Trade and Cooperation Agreement.

Under this Free Trade Agreement scenario, the research found that the level of GDP would be around 2 per cent lower over the medium-term (i.e. 5 years) and around 3 per cent lower over the long-term (i.e. 10 years), compared to a situation where the UK remained in the EU.

The conclusion of the Trade and Cooperation agreement is positive for the Irish economy compared to a no-deal scenario, as it will provide for zero-tariffs and zero-quota trade for qualifying EU and UK goods. It does not, however, mitigate against all ‘trade frictions’. Non-tariff barriers remain in the form of customs check, rules of origin requirements, and regulatory requirements. It is also very limited in respect of services.

The most recent trade data, published by the CSO in March, showed that the momentum in export growth seen throughout 2020 has taken a hit in the first month of 2021, with non-pharma exports to the UK recording a significant annual decline. Imports from the UK in all sectors also recorded a very substantial fall.

However, further data will be necessary to fully assess the short-term impact of Brexit, and the Department of Finance will continue to carefully monitor these developments.

In light of the COVID-19 pandemic, additional analysis was also jointly undertaken with the ESRI in 2020. The research found that that the long term impacts of Brexit were broadly in line with analyses undertaken prior to the pandemic.

Looking ahead, the Irish Government remains focused on protecting our economic and financial interests, and will continue to work to minimise the disruption that Brexit will have on the economy and peoples livelihood’s to the greatest extent possible.