An assessment of the economic impacts arising for Ireland from the potential future trading relationship between the EU and UK

The framework for the future relationship between the European Union and the United Kingdom: The potential impacts on Ireland

In 2017, the Department of Business, Enterprise and Innovation commissioned Copenhagen Economics to undertake a study to consider the impact of Brexit on Ireland’s trade and economy. This report was published in February 2018 and considered four different Brexit scenarios and the impact of each on the Irish economy. The four scenarios were an European Economic Area (EEA) type scenario, a Customs Union scenario, a Free Trade Agreement (FTA) scenario, and a WTO (No Deal) scenario.

Reflecting more recent developments with the adoption of the Withdrawal Agreement and the Revised Political Declaration (RPD) on the Future Relationship between the EU and the UK, Copenhagen Economics has modelled two additional FTA scenarios to take account of the provisions of the RPD.

The main conclusions of our study are:

• The Revised Political Declaration will lead Ireland’s GDP to be between 3.2% and 3.9% lower in 2030, compared to a baseline scenario where the UK remains a member of the EU
• This is a larger negative impact compared to if the UK’s future relationship with the EU would be an EEA-type solution (-2.8%), but a smaller negative impact compared to Customs Union or FTA scenario (-4.3%) and a lot smaller compared to a No Deal-scenario (-7.0%)
• The size of the positive impact on the Irish economy of the EU’s recent and prospective FTAs does not change much with the different Brexit scenarios, suggesting that the UK market and the FTA markets are complements, and not substitutes, for Irish firms.

The study is commissioned by the Irish Department for Business, Enterprise and Innovation.