Trade between Ireland and the UK is going to suffer “considerable disruption” even if a trade deal with the EU is agreed before the December deadline, Ministers will be told on Wednesday morning when the Cabinet meets to discuss Brexit.
According to a confidential memorandum to be circulated to Ministers, even the best-case scenario for an agreement between the EU and UK would cause serious problems for businesses importing from, and exporting to, the UK.
“Even an ambitious and deep agreement, if such were achievable in the short timeframe, will not be the status quo and will involve considerable disruption,” it states.
But officials express doubt the agreement can be concluded by the end of the year when the transition period is to end and the UK will no longer be covered by EU rules.
They say the possibilities range from “agreement on a deep and ambitious future relationship” to a “bare bones” free-trade agreement to no agreement at all.
“Failure to agree a free-trade agreement would result in trade taking place on WTO [World Trade Organisation] terms and significantly impact economic activity between Ireland and Britain,” it says.
If this occurs, the memo says, the size of the Irish economy is likely to be 7 per cent smaller by 2030 than it would otherwise have been.
Unemployment would be likely to rise by 1-2 per cent, the Economic and Social Research Institute has predicted.
Checks and controls
Even a free-trade agreement would result in the economy being 3.2-3.9 per cent smaller, while a “bare bones” agreement – covering only limited sectors of trade between the EU and the UK – would leave the economy 4.3 per cent smaller than it would have been had the UK not left the EU.
The memo says that regardless of the outcome of the negotiations, the Government will have to prepare for checks and controls at ports and airports, business readiness and possible disruption of the UK landbridge.
The Cabinet meets at Government Buildings on Wednesday morning, when Brexit will be one of the principal items on the agenda.
Although the Dáil has been dissolved, Ministers remain in office until they are replaced by a new cabinet which has been appointed by a new taoiseach elected by the new Dáil.
