There are many bystanders across Europe awaiting with baited breath the results of the UK’s referendum on leaving the EU. In most cases it’s extremely difficult to assess what the potential impact is going to be on the UK economy never mind others in Europe. However there’s some consensus from some economists that it is the Irish economy could be most affected by a decision to leave.
The latest research is from the Oxford Economics group who have studied the potential impact on Ireland’s economy in some detail. Their conclusions are that a ‘Brexit’ is almost certainly bad news for Ireland with the worst case scenario suggesting a 2.2 fall in Irish GDP.
The Irish economy is of course, in a period of recovery after a meltdown in the recession. This year however the economy is forecast to expand by nearly 5% with a similar expectation for 2017. This growth rate would be seriously affected if the UK left the EU and an even bigger impact would be on small businesses in Ireland.
It is difficult to overestimate the links between the UK and Irish economies. Although they are separate economies which is often highlighted to me when I can’t catch the news on BBC iPlayer Ireland when visiting Dublin – the UK is by far their biggest trading partner in Europe and the referendum is bound to have a huge impact.
Over 40% of Irish exports are sent to the UK and the percentage is probably much higher among smaller Irish businesses who often are completely reliant on UK trade. The actual impact though would depend largely on post-exit negotiations with both the EU and the Irish government.
There are certainly some much more favorable options which involve various settlements and agreements being made on immigration and trade. These could possibly mean that the impact is fairly inconsequential although these are likely to take time to negotiate and it is expected that even the uncertainly would have some impact on the economies of both the UK and Ireland.