The Irish economy will grow steadily for the remainder of the decade and outperform both the Northern Irish and British economies in the wake of Brexit, new research suggests.
The latest report into the state of the Irish economy compiled by EY, the professional services firm, claims that the Irish economy is robust enough to withstand the “seismic shift” caused by the UK’s departure from the EU and predicts continued growth in employment and consumer spending.
The report estimates that the economy will grow by 3.1 per cent next year — similar to the rate of growth predicted by the Economic and Social Research Institute (ESRI) last week — and at an average of 2.7 per cent over the next four years.
Neil Gibson, EY’s economic advisor, said that the uncertainty caused by Brexit has made forecasting economic growth much more difficult and added that it is likely to persist until the details of Britain’s withdrawal emerge.
“However, the island economy, and the Republic in particular, enters this turbulent period in ruder health than might have been expected, with employment rising and growth in Ireland continuing to top the European charts,” Mr Gibson said.
Advertisement
The pace of jobs growth will slow but remain steady over the next four years while the North will suffer from greater unemployment in the short-term, Mr Gibson said.
The EY Economic Eye report forecasts strong job growth in sectors such as retail and construction but paints a much less favourable outlook for agriculture.
About 14,000 public service jobs are expected to be created in health and education with 11,500 jobs in the retail sector and close to 21,000 in construction.
The report estimates that about 10,500 agricultural jobs will be lost, with Brexit likely to have a significant impact on the level of exports to the UK, on which many food producers rely heavily.
“The variety of jobs created recently in Ireland is welcome and is helping to drive down unemployment through the regions, but clearly the potential implications of tariffs and the shifts in the exchange rate, impact more severely on some sectors than others. Though the outlook is for Ireland to create more jobs, much depends on the detail of the exit deal,” Mr Gibson said.
Advertisement
Michael Hall, the head of markets at EY, said while Brexit has created severe uncertainty it has also opened the door for Ireland to attract significantly more investment from overseas.
“Our latest Economic Eye finds that the outlook is far more positive than we initially might have thought. Brexit presents an obvious investment opportunity for the Republic as it will be the only English speaking country in the EU and will be an attractive option for companies considering relocating from the UK,” Mr Hall said.
Enda Kenny said last month that the government has received a “stream” of enquiries from firms looking to set up in Ireland.
The Central Bank has also said that it is has spoken to a number of companies that have expressed an interest in establishing or growing existing operations in Ireland.
The EY report predicts that consumer spending will grow by an average of 2.7 per cent between now and 2020, which underpins its forecast for higher employment.