THE BREXIT CRUNCH
Most of us are fed up hearing about the political chaos and chicanery, but what does Brexit mean to your pocket?
How much will Brexit really mean to your pocket? We don’t know yet what kind of Brexit we will have, but whether it’s soft or hard, it will cost us dearly. It will affect your job, your wages, disposable income and how much you have to spend every week on groceries. Here we’ve worked out what a hard and soft Brexit means to you:
HOW MUCH MORE WILL I PAY FOR GROCERIES?
We’ll have to pay more even in a soft Brexit with no extra tariffs (taxes) on imports.
The ESRI estimates the cost of an average basket of shopping goods will go up by €892 per year, even if no tariffs are applied in a soft Brexit.
That’s because border checks and regulatory issues will make it harder to distribute goods.
In a hard Brexit, brace yourself for forking out €1,360 extra every year and foregoing tax cuts for some years to come as Government finances, and everything else, nosedive.
WHICH PRICES WILL GO UP
We’re an agricultural country but we import half our food, much of it from Britain.
It seems crazy, but we shipped in 72,000 tonnes of potatoes, mostly from the UK, last year. That’s 85 spuds per person.
Lots of other veggies are imported too. It’s simple economics. Farmers will grow whatever makes them the most money.
And in Ireland that usually means grass – whether it’s to feed dairy or beef cattle.
Some of our most famous interntional brands may be dairy products and we may have an abundance of dairy farms, largescale and artisan cheesemakers and creameries, as well as chicken and egg producers, but we still import a very large proportion of these staple foodstuffs. Some 38% of our milk, cheese and eggs is brought in from Britain – and 59% of our bread and cereals comes from there.
As a result, the price of food, par
ticularly eggs and dairy products, could go up by 21% and 46% in a soft and hard Brexit scenario, according to the recent ESRI studies.
It’s the same for bread and cereals. Our bread is mostly made from imported wheat, so prices here will jump by 21% in a soft Brexit – and 30% in a hard Brexit.
Those with a sweet tooth will also pay for it dearly as we import nearly a third of our sugar, jam, chocolate and confectionary from the UK.
However, despite all the gloom, many other products will be modestly affected by Brexit and many not at all.
These include the few items we are still self-sufficient in – like beer – or import directly from the continent or further afield, like wine.
Hi-tech goods such as electronics, jewellery, appliances cameras and medical goods are also likely to be less affected.
WHAT ABOUT WAGES?
Wages will take a hit as our economic prospects deteriorate with both a hard and soft Brexit.
But more significant is the hit on disposable income as scope for tax cuts reduces, according to the ESRI study.
Applying the ESRI percentage cuts, an average disposable income will go down by €460 a year even in a soft Brexit – and by nearly twice as much in a hard one.
WHAT ABOUT TAXES?
Recently, Taoiseach Leo Varadkar predicted Fine Gael would raise the level at which we pay the standard rate of tax to €50,000. That would be a noble feat, saving someone on that level of income around €3,000 a year.
But, it would all come to nought if Brexit goes badly for us.
Ireland would lose up to €100bn as output falls by 5% in a disorderly scenario. In an orderly nodeal Brexit, the economic hit would be 4.8% which isn’t much better. And even if there is a deal, the decline would be 2.6%.
WILL BREXIT COST ME MY JOB?
The ESRI reckons up to 80,000 jobs would be lost in a hard Brexit. But even in the softest Brexit scenario, it worked out this week, half that number of jobs would go.
Most at risk are those involved in dairy or food generally. Mushroom growers, for example, have already gone bust just from the fluctuation in sterling.