Hard Brexit to wipe £200 million from North’s food and drink sector: report

More than £200m could be lost from the food and drink sector in Northern Ireland over the next 15 years in a hard Brexit scenario, according to new research commissioned by the North's Department for the Economy.

It also found that the economy in Northern Ireland will be negatively affected in all Brexit scenarios.

The report, into the Direct Long-term Trade Impacts of EU Exit Scenario on Northern Ireland, was published by the Fraser of Allander Institute, an academic research centre at the University of Strathclyde.

It modelled the long-term impacts of scenarios including a hard Brexit, the backstop and a soft Brexit on Northern Ireland’s future trade relationship with the EU.

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In a hard Brexit scenario in which Northern Ireland and the rest of the UK trades with the EU under WTO rules and applying Most Favoured Nation (MFN) tariffs, the North’s GDP would be 3.3 per cent smaller in 15 years time.

The value of exports is predicted to fall by 11.7 per cent, with real wages 3.7 per cent lower and employment reduced by 1.7 per cent.

With a soft Brexit, in which all of the UK remained part of the European Economic Area (EEA), GDP is estimated to fall by 1.1 per cent.

The most affected industries would be the food and drink and agriculture sectors, with significant impacts to the manufacturing, financial services and wholesale and retail sectors.

The Gross Value Added (GVA) - or ‘real’ growth - in the food and drink sectors, is estimated to be 14 per cent lower after 15 years than it would be in the absence of Brexit, which corresponds to a reduction of approximately £225m.

The value of the agriculture sector is estimated to fall by 12 per cent, or £85m.

While proportionally the values of the wholesale and retail and financial services are smaller, their GVA is still estimated to be £225m and £211m lower respectively in 15 years’ time.

The report’s predictions are significantly lower than the estimates of the UK government in November 2018, which predicted a UK-wide decline in GDP of 9.3% in a hard Brexit scenario.

It uses a single region model which considers the regional economy in isolation. “Therefore the potential knock-on effects of reduced economic activity in GB for the Northern Ireland economy are not captured,” it said.

It also focuses solely on the impact of potential changes in trade, and does not consider other factors which could cause economic change.