Ibec: Long-term Brexit impact highly uncertain

The impact of Brexit is likely to hit parts of Ireland disproportionately harder than the rest, with the West particularly vulnerable.

The economy remains strong enough to weather the initial effects of the vote and will continue to grow strongly by 3.9% this year, but the longer-term impact remains highly uncertain, business representative body Ibec has warned.

A significant downturn in the UK economy and continued weakening of sterling — which has depreciated by 13% against the euro since the vote — would seriously weaken Irish businesses, with those in the regions most at risk, said Ibec director of policy Fergal O’Brien.

“The exporting industries most affected by the sterling fall are typically jobs intensive and deeply embedded in local economies,” he said.

“This adds to the risk that some parts of the country will be disproportionately hit. Already, regional employment performance is mixed. The West — Galway, Mayo, and Roscommon — has experienced a considerable lag over the past four years compared to other parts of the country.”

The threat posed by Brexit from 2017 onwards adds extra importance to the upcoming budget which must be used to support the most vulnerable industries and safeguard competitiveness.

Ibec also reiterated its call for more flexibility in the application of EU fiscal rules, which, it claims, are stymying much-needed infrastructural investment.

“Government must be much more assertive in making the case in Brussels,” it said. “Ireland desperately needs to spend much more on transport, housing and education infrastructure, while also remaining prudent on day to day spending commitments.”

Talk of a Brexit “soft landing” are premature and may yet prove to be a “dead cat bounce”, Ibec warned.