What are the likely economic effects of Brexit on both the UK and Ireland?
What are the welfare effects?
Economic effects of Brexit on Ireland:
would correspond to EUR 7 billion (2015-basis). The negative GDP impact could be worse in a customs union scenario or FTA scenario, where the GDP impact could be -4.3 per cent (corresponding to EUR 11 billion in 2015-level).
If a political agreement can be reached to avoid customs procedures in the customs union scenarios, the GDP impact could be reduced to 3.4% in this scenario. In the WTO scenario, GDP would be 1.0 per cent lower if no regulatory divergence occurs and 7.0 per cent lower than the non-Brexit baseline level of GDP in 2030 if UK regulation diverges to the full extent of non-FTA partners, cf. Figure 13. A 7.0 per cent drop in GDP corresponds to ¤18 billion on a 2015-basis
This impact via tariffs and customs could be larger in this scenario, if the EU and the UK does not continue to use TRQs on beef, as assumed. Brexit will not end economic growth in Ireland. All results presented above are reductions from the non-Brexit baseline, i.e. a reduction relative to the level of e.g. GDP that would have occurred in the absence of Brexit.
On the basis of an underlying long term growth rate of 2.2 per cent per year between 2017 and 2030, Ireland will still be more prosperous in 2030 than in 2017, even in the event of a WTO scenario. Our results predict that the level of Irish GDP could be 7.0 per cent lower in the WTO scenario with full regulatory divergence compared to what it would otherwise have been without Brexit in 2030. Translated into an average annual growth rate between 2017 and 2030 (and assuming a gradual adjustment) this means that Irish GDP would be growing at 1.7 per cent per year instead of 2.2 per cent per year on average (assumed baseline growth without Brexit). Under the EEA scenario, Irish GDP would be growing at 2.0 per cent per year.
The impact of Brexit in the WTO scenario is estimated to result in GDP being 7 per cent lower in 2030 than would be the case in the absence of Brexit. In the short-term scenarios, we estimate a -0.5 per cent impact on GDP in 2020 in ‘soft Brexit’ and -2.1 per cent in ‘hard Brexit’.
Labor market impacts of Brexit on Ireland :
The economic implications of Brexit on both sides of the Irish border:
The Welfare Effects:
What are the likely economic effects of Brexit on both the UK and Ireland? What are the welfare e...
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