UK Leaving the EU – Possible effects on Ireland

Voters in the UK have decided that they want to leave the EU.

This seems to have come as a bit of a surprise to almost everyone.

How could this affect Ireland Financially ?

As part of Budget 2017 – the government published their Summer Economic Statement just before the UK vote on the EU .
In the statement there was a small section on the possible effects on Ireland of the UK leaving the EU .  It said that recent reports from the UK  Treasury  and  The National Institute Economic Review suggested that a vote to leave the EU could reduce UK GDP by between 2.3 and 6.0 per cent.

It also stated that it is estimated that every  1 per cent reduction in UK GDP would reduce Irish GDP by approximately 0.2 per cent over two years. This implies a possible fall in Irish GDP  in the range of 0.5 to 1.2 per cent .

A fall in UK GDP would also be expected to impact on our other EU trading partners. Estimates  suggest that if euro area GDP were to also fall by 1 per cent,  Irish GDP would fall by a further 0.4 per cent.

Both UK reports also predicted  a fall in the value of sterling in the event of a vote to leave the EU.  A  5 per cent sterling depreciation could cause a loss in Irish GDP of 1 per cent after 2 years.

If the UK had remained in the EU  – Irish GDP was projected to increase by 5% in 2016. The effect of a British exit from the EU could lower this to 3 or 4% .

Irish exporters will be the first to suffer if , as expected , the pound weakens significantly against the euro. This will make their euro-priced goods more expensive for UK importers .  Foreign Minister Charlie Flanagan said this week that if this happens , Ireland will have to consider taking steps to assist firms exporting into Britain.

There is , on the other hand , possible good news for Ireland as a result of the UK vote. Companies who have their EU bases in the UK may end up moving to other EU countries  , possibly to Ireland.   Morgan Stanley have already said that they might move  UK staff to Dublin or Amsterdam because of Brexit.  Before the vote ,  Switzerland’s Credit Suisse announced they would be moving a range of operations including a trading floor from London to Dublin.
Other banks that might move from the UK to Ireland are non-EU institutions with large London offices, including US banks such as JPMorgan and Goldman Sachs.
Deutsche Bank employees 12,000 employees in London, and it said it was looking to relocate a good portion to elsewhere in Europe.

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1 thoughts on “UK Leaving the EU – Possible effects on Ireland

  1. Still, no new houses build in or around Dublin, might increase the rent and houses prices around the area. In the terms of wages – if UK employees were earning i.e. £40k would they be earning now €40K or more? The Tax system in UK/IE is different. The same could be said about local transport. One Luas line (in fact connection of two lines) would not improve the transport. Dublin and Ireland has to change fast to adapt to this situation and I don’t see this coming in a current bribe-driven environment.

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