Planning for Brexit
In
a referendum on the 23rd of June 2016 the UK
electorate voted to leave the EU. As a result the changing relationship
between the UK and
Ireland will be determined between EU and UK
parliamentarians. The impacts on individuals and businesses in Ireland
and the UK will range between minor where the
agreement reached is similar to that between Norway and the EU, to
major where the trade between the EU and the UK comes under the
World Trade Organisation (WTO) tariff regime and labourr movement
between the EU and the UK is curtailed.
The Exchange Rate
In
September
1992 Britain adopted a floating exchange rate system after
withdrawing
the pound sterling from the European Exchange Rate Mechanism (ERM). The
Brexit factor has already kicked in with a weakening of the pound
against the euro and the dollar in this floating exchange rate system.
The effects will be:
1. The Higher
prices of imported goods should spell a drop in demand.
2. Exports
should see a rise in demand because of the falling value of Sterling.
The impacts may vary dependant on the types of goods and services.
Source: Graph compiled from Central
Bank of Ireland Data
Source: Graph compiled from Central
Bank of Ireland DataBusiness Sector Analysis
The methodology BPPM shall be using to measure
potential impacts on sectoral businesses is an econometric model.
This model focuses on the behavior of the Irish and UK
economies in terms of gross domestic product, product consumption,
employment, product imports and product exports using variables such as tarriffs,
exchange rates, and interest rates.
The
price elasticity of demand for products is the
degree to which demand for a good or service varies with its price.
Price elasticity of demand varies both within and between sectors
dependent on factors such as:
1. - Availability of
Substitutes
2. - Definition of Product
3. - Number of Product
Uses
D-Day
for the British Prime Minister Theresa May to trigger Article 50 and
initiate the UK’s exit from the European Union is 29th March 2017.
The exit process negotiations may take around two years
to complete. However the decision to leave has already had an impact on
Irish exports. The USA and the UK are by far, Ireland’s largest trading
partners. The impact of currency changes is reflected by the fact that
exports to the UK decreased from 12.29% (€13.8.4bn) 2015 to 11.39%
(€13.31bn) in 2016.
The
impacts of price changes brought about because of exchange rates and
tariffs are examined for good and services within the following sectors.
n.e.s.: Not elsewhere specified
Irish Exports Classified by Commodity 2014-2016
Changes in Irish Exports to Great Britain and Globally
Source: Chart compiled from Central
Statistics Office Data
Source: Chart compiled from Central
Statistics Office Data
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username and password is required to gain access to the detailed sectoral analyses.
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comments form.
Effects of Brexit on the UK and Ireland Economies
The formula for an economy’s annual gross domestic product GDP is the sum total of
C + G + (X – M), where C, and G represent consumer spending and government spending. (X – M) which represents
exports minus imports, or net exports. If exports exceed imports, the net
exports figure would be positive, indicating that the nation has a trade
surplus. If exports are less than imports, the net exports figure would be
negative, and the nation has a trade deficit. 
Source: Figures from Central Statistics Office (CSO)
Source: Figures from Central Statistics Office (CSO)
