Irish economic growth forecasts for 2019 would have to be almost halved if the UK leaves the European Union without a deal, according to one of Ireland’s leading think tanks.
The Economic and Social Research Institute (ESRI) said on Wednesday that a no-deal scenario, which could force the UK to trade under Word Trade Organisation (WTO) rules, would see Ireland’s economy grow by just 2.5% in 2019.
This is compared to a 4% economic growth forecast if the UK decides to stay within the EU, and what it calls a “relatively benign” exit from the EU that could see the UK agree to a European Economic Area deal.
“While the outlook for 2019 is also positive for the Irish economy, next year will see a number of significant challenges mainly from an international perspective. The outcome of the Brexit process is particularly important,” the government-funded but independent think tank said.
It forecast that the country’s GDP would grow by 8.2% in 2018, and by 4.2% in 2019 if the UK effectively stayed within the EU, via a transition arrangement contingent on the UK signing a withdrawal agreement with the bloc.
“The Irish economy looks set to register another exceptional performance in 2018; employment is growing at 3% with taxation receipts across most headings also experiencing better than expected returns,” the ESRI said in a statement.
It warned, however, that increased expenditure planned in the country’s recent budget has “inevitable implications for the public finances, with a deficit now likely in 2019.”
Ireland’s leading budget watchdog last month warned that the Irish government was repeating the mistakes of the past and said that its budget decisions were leaving the country “more exposed to adverse shocks” than necessary.