As we approach the October 31st deadline with the chances of a Brexit deal becoming increasingly unlikely, policy makers and think thanks are grappling with the potential implications of a No-Deal Brexit for the Irish economy. The ERSI has warned in a recent report that the economy could be plunged into a recession next year in the event of a No-Deal Brexit, adding that the result could be the loss of an estimated 85,000 jobs. This, coupled with Ireland’s high national debt levels, leaves Ireland vulnerable to a shock of this nature.
With Boris Johnson’s succession as Prime Minister and the subsequent chaos in the House of Commons, the Irish Government have stepped up preparations for no deal. One immediate impact the recent turmoil in the UK will have is on the country’s upcoming budget. As the status of the UK’s future relationship will not be clear until November at least, the Minister for Finance, Pascal Donohoe, has no choice but to prepare for the worst case scenario in the upcoming budget. While the Taoiseach Leo Vardakar previously indicated that there may be tax cuts for citizens in this budget, it is likely that this exchequer revenue will have to be diverted to no-deal preparations. It is expected the Minster will set aside as much as €700m for special support to the agricultural and food industries and other sectors exposed to big Brexit losses.
In the medium term, it has been recognised by Irish and EU leaders that a crash out without a deal in place will require the erection of a hard border between the Republic of Ireland and Northern Ireland. Michel Barnier recently commented that it seemed the UK had “given up on the concept of preventing a border in Northern Ireland as well as the necessity of preserving the all-island economy”.
Along with the potentially devastating economic consequences to agriculture and supply chain disruption, the erection of a border has repeatedly been flagged by security experts such as former PSNI chief Sir Hugh Orde as a major security risk, with a potential escalation in violence from dissident republicans on both sides of the border expected.