The Economic Survey of Ireland published this Thursday by the Organisation for Economic Co-operation and Development (OECD) confirms earlier studies into the severe effect of a hard Brexit on agriculture and food, describing the scenario as a "trade shock".

Using computer models predicting the effect of standard World Trade Organisation tariffs between the UK and the EU and non-tariff barriers such as different health regulations and border checks, the OECD predicts that "the most severe contraction in exports is for the Irish agriculture and food industries, which experience a fall in gross exports of around 20%".

Exports to UK to fall by one-third

A hard Brexit would cut Irish agri-food exports to the UK by one-third, and would also shrink shipments to the rest of the EU by approximately 5% ot 10%, the survey shows.

"Some of the sectors hardest hit in the illustrative scenario are concentrated in rural areas, highlighting regional disparities from the economic impact," the OECD noted, with agriculture and food processing but also other manufacturing industries most exposed to Brexit located outside the main cities.

This confirms earlier analysis by IBEC and the ESRI.

The border and midlands were already slowest to recover after the recession, and a hard Brexit could increase poverty in this region and worsen national income inequality, the OECD warned: "In response, the Government should be prepared to deploy or reorient targeted social policies accordingly."

I propose that we aim for a trade agreement covering all sectors and with zero tariffs on goods

The Economic Survey of Ireland comes after British prime minister Theresa May confirmed last week that the UK would leave the European single market and customs union after Brexit. "Therefore, it should come as no surprise that the only remaining possible model is a free trade agreement," European Council president Donald Tusk said on Wednesday, launching discussions on the future trading relationship between the EU and the UK.

"I propose that we aim for a trade agreement covering all sectors and with zero tariffs on goods," Tusk added, but he warned: "This will be the first FTA in history that loosens economic ties, instead of strengthening them. Our agreement will not make trade between the UK and the EU frictionless or smoother. It will make it more complicated and costly than today, for all of us. This is the essence of Brexit."

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