As Brexit negotiations continue in Brussels as we go to press, there is still no certainty on what the outcome will be. The mood has swung from optimistic to pessimistic in recent days on the prospect of the withdrawal agreement being concluded and then if that is done successfully the real work begins on sorting a future trading relationship.

The catastrophic impact of a no-deal Brexit on Irish farmers has been frequently highlighted, with the exports of beef and cheddar particularly vulnerable.

Wider economy

What is less frequently considered is the likely negative impact of Brexit, with a deal not just for agriculture but for the wider Irish economy. A report for the EU Parliament’s Committee on Internal Market and Consumer Protection (IMCO) looked at a number of studies on the impact of Brexit over the period to 2030.

Most considered different scenarios ranging from no deal to a customs union (CU), free trade agreement (FTA) or the UK being part of the European Economic Area (EEA).

UK treasury forecast

The most pessimistic outlook is contained in figures presented by the UK Treasury. They envisage that the UK economy would be 3.8% worse off in terms of GDP as part of the EEA than they otherwise would have been by 2030.

That is the closest possible trading relationship to the present EU membership and the hit for the UK economy is predicted to rise to 6.2% if they have just an FTA or customs union membership.

However, if future trade between the EU 27 is conducted under WTO rules then the UK Treasury predicts that the UK GDP will be 7.5% less in 2030 than it would have been as an EU member.

Copenhagen Economics

A Copenhagen Economics report for the Irish Government last year produced strikingly similar results for the impact of Brexit on Ireland. In their modelling, if the UK was to become part of the EEA after leaving the EU and the transition period, then the Irish GDP in 2030 would be 2.8% worse than if the UK had remained in the EU.

In the customs union or FTA situation, Copenhagen Economics estimates that Irish GDP will be 4.3% less than if the UK was still in the EU, while if trade is on a no-deal WTO basis then Ireland’s GDP is predicted to be 7% lower.

Rest of EU

Neither Copenhagen Economics nor the UK Treasury considered the impact of Brexit on the 26 other EU countries. The EU Parliament’s IMCO committee did, however, include other studies which suggested that Brexit would have up to five times the impact on the UK than it would have on the EU 27 as a whole.

A report by Roja-Romagosa/Cental Planning Bureau in the Netherlands put the impact of Brexit based on an FTA between the EU and UK as being a 3.4% hit on the UK’s GDP, while the impact on the EU 27 would be 0.6%. If there was no deal and trade took place under WTO terms then the forecast impact would be a 4.1% hit on the UK GDP, while the impact on the EU 27 is predicted at 0.8%.

These comparisons are based on the period between 2015 and 2030 and the baseline for the calculation is compared with the UK having remained as an EU member. Interestingly, the figures for Ireland are almost the same as they are for the UK in this study, reinforcing that of the remaining EU 27 countries it will be Ireland that takes the biggest hit from Brexit.