Landscapes, a vibrant economy and the natural Irish welcome. This is how you define Ireland. And now you add another aspect: Ireland after Brexit. A rainy country has now the potential of seeing the rainbow due to its pro-EU attitude, bracing for the impact over more expensive food imports from the UK, welcoming the relocating companies and also discussing about the 500 km border with Northern Ireland. This is what I learned after living for some months here:
Still dark clouds are present as the Economic and Social Research Institute (ESRI) said that the economy could grow by just 2,5% this year if the UK leaves the EU without a deal. According to one of Ireland’s leading think tanks it means that the growth will be almost halved than 2018. It calls also for additional measures to backslash it.
The dates come after Ireland’s finance minister said on Twitter in December that in Q3 the economy grew by 4% y-o-y while consumption growth was up 3%. It is a “solid growth but careful management of the finances needed”.
What changes will the Brexit have in this picture? Experts warn that jobs will be lost, unemployment will grow and housing and health investment in Ireland will suffer in the event of a No Deal. But it could mean also that companies will move their headquarters from London to Dublin. So the capital tops list in financial Brexodus, financial companies beating the lines to come here. With a shade of negativity because of the housing crisis and because more people mean less houses available. But also maybe some of the company could start building some affordable ones for their employees…
For now activity growth among Irish service providers slowed in December for the third consecutive month, and was the weakest since November 2017, according to the latest Services Business Activity Index. Add some fuelling inflation, but also a bit of sparkle because the new export business expanded at a faster pace in the same month.
Also, in the recent report from the Ministry of Finance, after the surplus in the economy in 2018, this year we will be seeing a somehow small deficit of 0,1%. Some details from it: the end of ultra-cheap borrowing costs (including for the sovereign) is ending, risks seeing are the global economy slowdow, impact of Brexit and rely on corporate tax.
Another “hot potato” is talking about the food products. The country seems to be a net exporter, according to the Prime Minister. And in the event of a hard Brexit the food shortage would mean packaged good like the ones from Marks&Spencer. Also the beverages sector could be affected as the majority of juices are imported from the UK.
But for an agricultural country like Ireland the solution could be finding new markets to export the goods produced here (some important ones % are now transported in the UK) and also to find alternative routes and countries to import food. Of course this will add to the need for extra 600 custom officers and more staff in agriculture by the voice of Government stated. Also, there are plans of purchasing land at Dublin Port and Rosslare in order to prevent congestion caused by any new custom checks, in the event of a no-deal Brexit.
Moreover Taoiseach says Government will seek State Aid clearance from Bruxelles in event of Hard Brexit or No Deal. So the Irish firms affected could receive some help.
But for now let’s see what happens and which part the rainbow forms.
*The UK is due to leave the EU at 11pm on 29 March 2019.