No-deal exit will cost Ireland up to 40,000 jobs, warns Donohoe

A NO-DEAL Brexit will result in the loss of 40,000 Irish jobs and severely hit exporters and the agri-food sector, the Finance Minister has warned.

As British Prime Minister Theresa May prepares to publish her latest Brexit plan today, Paschal Donohoe painted a stark picture of a “cliff-edge scenario”.

He said that unless the EU and UK can reach agreement in the coming months, it will result in significant job losses, new customs restrictions, market volatility and disruption on trade across the Irish Sea.

This “material and real impact” would hit Ireland greater than other EU countries, he said, adding that the agri-food, manufacturing, and tourism sectors would be especially vulnerable.

In the Dáil yesterday, Mr Donohoe said that consumer spending in the Republic would take a hit unless a comprehensive deal was secured. Ireland’s competitiveness would also take a significant hit with trade tariffs and additional business costs hitting Irish enterprise.

“As well as the significant discontinuity and additional costs for businesses arising from the abrupt imposition of tariffs, there would be customs procedures and other non-tariff barriers,” Mr Donohoe said.

“We would have the largest effect here in Ireland. The shock would likely lead to market volatility, further sterling depreciation, and disruption to trade with the UK. This would have negative impacts for consumer spending, investment and competitiveness, with potential spill-overs to the labour market and public finances.

“Sectors with strong export ties to the UK, such as agri-food, manufacturing, and tourism, would be especially exposed, in particular at the regional level.”

Mr Donohoe cited research done by his department and the Economic and Social Research Institute (ESRI) which shows that a no-deal scenario would see Irish unemployment spike by 2pc. He conceded job losses would be expected to reach 40,000 and economic output would drop by 4pc over a 10year period when compared witha scenario where Britain was to remain within the EU.

“The level of employment in Ireland would be 2pc lower, with the unemployment rate nearly 2pc higher,” he said.

“In the short term, a no-deal hard Brexit would have a material and real impact on Ireland, which would be asymmetric relative to the rest of the EU.

“The best way to deal with the risk of a no-deal hard Brexit is to build up our budgetary capacity and implement the right domestic policies.”

He said the Government must prioritise economic growth and getting its finances in order before Brexit negotiations are concluded to deal with any fallout from the UK failing to reach an agreement on its exit from the EU. Efforts would then have to be made to adjust to a new working environment with the UK.

Measures were being put in place to deal with any future fallout, he said. This includes ramping up capital investment, securing national finances and establishing supports for businesses and communities. This includes creating a rainy-day fund to deal with further shocks and investment in schools, roads and infrastructure projects to boost competitiveness.