Today, the Economic and Social Research Institute (ESRI), the leading think tank of Ireland lowered its standard forecast for the economic growth of the country for year to 3.8 percent. It also warned that the economy of Ireland would improve by only 1.2 percent in the event of a “disorderly” no-deal Brexit scenario.
The new forecasts released imply that the growth of the economy of Ireland is expected to be sunk by almost 75 percent if the United Kingdom leaves the European Union without a deal.
Previously, the think tank had disclosed that such a scenario would cut the economic growth in half.
In a statement, the ESRI said that the lower expected pace of growth for the year can be generally explained by a “slowdown observed in the global and European economies since the end of last year.”
It also disclosed that it expected that the Irish economy to improve by 3.2 percent this year in a normal scenario, and by 2.4 percent if there is a no-deal Brexit.
The think tank stated that there were “persistent uncertainties with respect to the form of the UK’s withdrawal from the EU.” It also said that its most severe predictions were reserved for what it called a “disorderly no-deal” scenario.
The results of the analysis of the ESRI imply that employment levels would be 3.4 percent lower as compared to a scenario where the UK stayed within the bloc.
The think tank stated that a “disorderly” no-deal scenario would involve “additional disruption to trade in the short-run” as compared to what it considers to be the standard effect of a no-deal situation.
The new study predicts that the effect of Brexit on the economy of Ireland by looking at the impact it has trade. This was done by trying to predict the impact of the tariff and non-tariff measures of the United Kingdom. However, it also included the potentially positive effect of foreign direct investment diversion to Ireland from Britain.
The ESRI stated: “Ultimately, while the [foreign direct investment] effect is expected to have a positive effect on Ireland, the positive impact is outweighed by the negative trade effect.”