In the latest quarterly economic bulletin for the Irish economy the Central Bank singles out the threat to the agri-food sector from changes in EU-UK trading arrangements following the introduction of customs and sanitary and phytosanitary requirements by UK.

The bank makes the point that as a whole, Ireland’s economy is much less reliant on the UK market than it traditionally has been.

However, the agri-food sector still relies on our closest neighbour for 40% of exports. Within the agri-food sector, large firms account for 64% of exports to the UK, with small and medium-sized businesses making up the balance.

The Central Bank said that the new trading arrangements “introduce new complexity and cost for Irish firms” with the ultimate impact of the changes depending on, among other things, the extent to which these costs can be absorbed in profit margins or passed onto customers in the UK.

The bank warns that ultimately it could lead to a reduction in exports from the agri-food sector, which is likely to negatively affect economic activity and employment in Ireland, “in particular in regions outside the main urban areas where employment-intensive agri/food activity is concentrated”.

The bulletin also says that Brexit has already lowered UK economic activity relative to where it would be if the country had remained in the EU.

This drag on growth is “likely to persist over the long term” the bank says, adding that the spillover effect, along with the direct effect of new trade restrictions, “will negatively affect economic activity in Ireland over the coming years.”