A no-deal Brexit would hurt growth prospects in Ireland more than in any other country in Europe, the International Monetary Fund (IMF) has warned.
The IMF issued its stark warning yesterday, saying that a no-deal scenario would cut 5pc to 8pc off the UK’s output over the long term.
The report on the British economy spelled out the damage that had already been done by the vote to leave the European Union, which the IMF said had caused a rise in inflation, depressed consumption and hurt business investment.
“A scenario in which future trade between the UK and the EU is governed by World Trade Organisation rules is estimated to bring about output losses of around 5pc to 8pc compared to a no-Brexit scenario in the long run,” the IMF said in its report.
Among EU states, Ireland’s close trading links with the UK would see it hardest hit by a no-deal with growth being hit by 3pc versus a situation where the UK had stayed in the bloc.
Bilateral trade with the UK represents 13pc of total Irish exports and 12pc of total imports, while Britain’s transport links to Europe are a key part of the supply chain for imports and exports.
Food and freight industry groups have previously warned of difficulties in getting fresh food on the shelves in the event of a hard Brexit.
Food sent to Ireland from ports like Calais in France or Zeebrugge in Belgium would take longer to get here if not routed through Britain, via the so-called “landbridge”.
But avoiding Britain might be the best option if Brexit results in new British customs checks that cause substantial delays.
That means fresh produce would be more likely to go off while in transit, or would be less fresh on arrival on the shelves.
Aidan Flynn, general manager of the Freight Transport Association Ireland, said that in the event of a hard Brexit, there will be “serious impact in terms of shelf life” for any product relying on the landbridge.
He said fresh meat, poultry and vegetables were among the products being transported across the landbridge at the moment.
Mr Flynn said it would take almost twice as long to go around Britain via sea.
Products already coming directly to Ireland via Cherbourg, including fruit and vegetables from Spain or Portugal, would be unaffected, however.
Overall, the IMF sees the British economy expanding by about 1.5pc annually, barring a disorderly Brexit.
It warned the pound could fall substantially with a no-deal, a move that would cause pain for exporters here.
Far from delivering new funds for Britain’s public finances and the National Health Service, as leave campaigners had claimed, Brexit will shrink budget revenues, the IMF said.
“While there could be some direct savings from the net contributions to the EU budget that the UK will no longer make – although it is unclear how much will be available after payments on the agreed withdrawal settlement – there is no ‘Brexit dividend’ to public finances, as lower fiscal revenues due to lower output more than offset any direct savings,” it said.
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