DESPITE all the portents of doom and gloom being generated by the possible outcomes of Brexit, the Economic and Social Research Institute (ESRI) predicted in its Spring economic commentary that the Irish economy should grow by 3.8% in 2019, albeit a reduction in the rate previously predicted. This reflects the slowdown in the global and European economies since the end of last year.
The unemployment rate in 2019 is expected to average 5.2%, falling to 4.8% in 2020. Also next year, they expect the Irish economy to grow by 3.2%.
Consumption and underlying investment are expected to be important drivers of growth over the period, according to the ESRI, who qualify their forecasts for 2019 and 2020 by saying that they are based on the assumption that the UK’s departure from the European Union will be delayed well after March 29th as part of the transition period during any withdrawal agreement.
So far, no withdrawal deal has been ratified by the British Parliament, but the ESRI – in conjunction with the Department of Finance – has studied a number of possible Brexit scenarios and made further predictions, the main ones being that GDP in Ireland ten years after Brexit will be around 2.6% lower in a withdrawal deal scenario, 4.8% lower in a no-deal scenario and 5.0% lower in a disorderly no-deal scenario, respectively, compared to a situation where the UK stays in the EU.
Employment would be 1.8% lower in a deal scenario, 3.2% lower if there’s no deal and 3.4% lower in the event of a disorderly no-deal exit. Unfortunately, it seems that uncertainty is the only certainty.