No WONDER they’re desperate for a deal! Analysis exposes Brexit disaster for Ireland
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Negotiations on future trading are ongoing but ahead of the European Council summit in Brussels on Thursday – a deadline set by Boris Johnson to agree a deal by – no significant breakthrough has been made. Significant differences remains between the two sides on several red lines, in particular fisheries, the EU’s level playing field and governance. EU leaders meeting in the Belgian capital on Thursday will say progress in talks with Britain is “still not sufficient” to seal a new trade deal, according to a draft summit decision seen by Reuters.
The leaders of the remaining 27 EU member states will agree to step up plans for a no deal Brexit, without an agreement in place on trade tariffs and quotas.
The summit will also tell the EU’s chief negotiator Michel Barnier to intensify talks to get an agreement before the end of the transition period on December 31.
But with nearly £1trillion of annual trade at stake, a new report from the European Central Bank has warned Ireland – which counts the UK as its largest trading partner – will be the hardest hit in the event of a no deal outcome.
The report from the International Relations Committee Brexit Task Force entitled ‘A review of economic analyses on the potential impact of Brexit’ summarises the economic analyses of the potential impact of Brexit on the UK, EU and euro area as a whole.
It states Ireland’s GDP would plummet 2.03 percent in the event of a no deal Brexit that would see the UK and EU continue to trade on World Trade Organisation (WTO) terms.
The UK follows with a drop in GDP of 1.73 percent under this scenario, followed by Malta (-1.73 percent), Luxembourg (-1.4 percent), Cyprus (-0.5 percent), Belgium (-0.46 percent) and the Netherlands (-0.44 percent).
Looking specifically at the macroeconomic implications, the reports warns “Brexit has the potential to make a significant impact on the Irish economy”.
The ECB report says: “Given the reliance of the Irish economy on exports, assumptions on external demand are a key input into any forecast for the economy.
“These external demand assumptions are in turn critically dependent on the forecasts for growth in Ireland’s three key trading partners: the United States, the United Kingdom and the euro area.
“In the case of the United Kingdom, Brexit may reduce growth and hence UK demand for Irish exports. It may also have an impact on euro area (and US) output.”
“As the United Kingdom is Ireland’s single largest trading partner, Brexit has the potential to make a significant impact on the Irish economy. Just under 13 percent of Irish goods exports and 16 percent of its services are sold into the UK market.
“Around one-quarter of Irish goods imports come from the United Kingdom. For specific sectors, such as the employment-intensive agriculture and food sector, the dependence on the UK market is even larger than suggested by these aggregate figures (Donnellan and Hanrahan, 2016).
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“Around 40 percent of Irish agri-food exports are destined for the UK market (Department of Agriculture, 2018).
“Lawless and Morgenroth (2016) show that, because some of the highest WTO tariffs apply to agricultural products, a hard Brexit could have severe negative consequences for this sector of the Irish economy.”
On Tuesday, Ireland’s foreign Affairs Minister Simon Coveney played down the prospect of a trade deal being agreed between the UK and EU over the coming days, but warned time is running out.
He added the UK Government’s controversial plan to break international law through the Internal Market Bill would need to be abandoned if a deal is to receive the sufficient backing of EU leaders.
Mr Coveney said: “There are a number of weeks left in this negotiation, not a number of days, so when the European Council meets at the end of this week there will be a detailed stocktake on where we are in these negotiations.
“But certainly I don’t see that there will be any major breakthrough this week.”
He added: “All of us need to ensure that we do everything we possibly can to make sure that we make a deal possible in the next few weeks because we are running out of time.
“And once we get to the end of this month then I think we really are running out of time to ratify any deal that may be struck.”
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