‘Hard Brexit’ could mean higher prices for Irish consumers

The Government has warned that Irish consumers will have to pay higher prices for goods and services if the UK leaves the European Union with no exit deal.

In its annual “national risk assessment” document, the consequences of a so-called “hard Brexit” are outlined.

Such a Brexit outcome would lead to the trading relationship between Britain and the European Union reverting to World Trade Organisation rules, which would mean the introduction of tariffs on certain types of products.

While Ireland’s agri-food sector would be worst affected because it exports to the UK, the Government believes a hard Brexit – which would see Britain leave both the EU customs union and single market – would increase import costs on goods from Britain. It would also lead to higher energy costs, the paper says.

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"As the UK is one of Ireland's most important sources of intermediate and consumption goods, the aforementioned concerns could increase import costs," the document says. "In the energy sector, for example, Ireland imports around 88 per cent of its total energy requirements, worth around €4.6 billion annually, mainly through the UK.

“This could have an inflationary impact, which would see Irish consumers face higher product prices and the cost base for Irish manufacturers rise.”

Housing effects

The document also outlines a number of other risks, such as the effect on the economy of the lack of housing.

“Housing shortages and associated high costs are clear risks for Ireland’s national competitiveness and its attractiveness for inward investment, for skilled migrants and for the return of Irish migrants,” it says.

“The supply and affordability of residential housing is an element of Ireland’s ability to compete internationally, it affects Ireland’s attractiveness as an investment location for investment, and it impacts on enterprise costs – directly through wage effects and indirectly in determining the cost of Irish goods and services.

"Labour mobility is influenced by the cost of renting and purchasing housing, and it affects the ability of the economy to adjust to adverse economic shocks."

Cyber attacks

The document, published by the Department of the Taoiseach, also says the possibility of cyber attacks, such as those which have recently affected multinational companies, are a concern.

This includes the risk posed by data fraud carried out by hackers.

“The fact that Ireland is home to a large number of international data centres, means that a serious attack or cyber-security failure could have a damaging impact not just on our reputation, but also on our economy,” it says.

“Data protection and security are of critical importance for both citizens and enterprises. There is also a risk, albeit considered low at present, of a broader criminal or terrorist attack on the internet as a fundamental component of the infrastructure underpinning a wide range of economic and social activities.”

On the issue of terrorist attacks similar to those seen recently in Manchester and London, the document re-iterates the Government position that although such an attack is “unlikely” it is “nonetheless possible”.

“The recent attacks in London and Manchester serve to highlight the challenging nature of the threat and the need for continued co-operation among partner states to counteract it,” it says.

“Such an attack here could have significant impact in terms of public safety and security in the short term, and there could possibly be longer-term reputational damage to Ireland as a safe and secure destination to live and work in, and to visit.”