How Brexit could affect Irish economy and possible solutions
We are still trying to understand all the possible consequences of Brexit for the other countries in the EU, but Ireland has a special position in the situation. What will Brexit mean for Irish GDP? An independent research led by Copenaghen Economics for the Government states that in 2030 Irish GDP will show a 2.8% reduction which wouldn’t happen if the UK doesn’t leave the EU. And that is the best scenario. The worst one imagines impossible tariffs that the UK and the EU will impose on their products, which would lead to a 7% reduction of Irish GDP in what experts call “hard Brexit”. Both exports and imports would be damaged. The sectors which are more exposed to these damages are agri-food, pharma-chemicals, air transportation, electric machinery and retail, but also web companies.
Ireland has to face this possible crisis with policies to mitigate the impact Brexit will have on its economy. This means our government should think about trade negotiations with other partners and common regulation, so that Brexit would only have impact on tariffs and border taxes. Beside the hope that the UK will close a deal with EU, Ireland can negotiate with South American countries, or Australia and New Zealand. Also, the new FTAs is now concluded, so we will possibly see some benefits from the trades with Japan and Canada.
Another domestic policy could be to open to new markets, but also to new business. For example, Brexit has a huge impact on gambling business, since it represents a large part of their economy. During these last years, many foreign operators asked for a license to the UK Gambling Commission and they could offer their services to the customer. Brexit will change this situation, so possibly the players won’t be able to play on the existing online casinos with license and this will lead operators to look for new areas. In Ireland gambling laws are still not very clear and in the last few months the topic has been discussed many times. Maybe Ireland could help some operators to relocate in our territory, taking advantage of this situation to create a new law about gambling regulation.
Wheter the solution will be, Ireland can’t afford to lose billions of euros and government should be prepared for next year, when Brexit will become reality.