More than 50,000 jobs will be lost amid rising food and clothing prices if the UK continues on the path towards a disorderly Brexit.
Doomsday predictions on the impact of a no-deal scenario compiled by the Department of Finance suggest the economic impact will be “particularly severe”. The agriculture sector and small businesses who export to the UK will begin to shed employees during the second half of the year, followed by a “deepening” of the crisis in 2020.
Taoiseach Leo Varadkar said: “In 10 or 12 weeks’ time, we could find ourselves needing to find a lot of money to save people’s jobs because there are people working in the food industry, in agriculture, SMEs, and in small exporters, whose jobs may be under threat.”
Capital projects such as the Metro could also be in danger while promises of income tax cuts will be reviewed ahead of the next budget.
A majority of British politicians last night voted for Theresa May to formally demand a new deal on the Irish backstop – despite continued insistence from the EU that the Withdrawal Agreement cannot be renegotiated.
The move was met with fury in Dublin where ministers feel betrayed. One senior Government source told the Irish Independent: “Theresa May just tried to torch the deal we all spent two years working on, and contradicted what she herself said about owing Northern Ireland the backstop as the only non-aspirational way to avoid a hard Border.”
Until recent days, Mrs May always maintained that the deal she agreed with the EU in November was the best one possible. However, she has now backed calls for the backstop to be replaced with undefined “alternative arrangements”.
Adding further confusion to the UK position, MPs also passed a motion to “reject leaving the EU without a deal”.
Mrs May will now go to Brussels to demand “legally binding changes to the Withdrawal Agreement”.
A spokesperson for EU Council President Donald Tusk immediately responded by saying the deal “is not open for renegotiation”.
In a statement, the Irish Government echoed that message. It said the backstop “balances the UK position on customs and the single market with avoiding a hard Border”.
“A change in the UK red lines could lead to a change in the Political Declaration on the framework for the future relationship, and a better overall outcome,” it added.
Meanwhile, Finance Minister Paschal Donohoe said it was very difficult to accurately predict the full scale of the risks a cliff-edge Brexit brings. He said food shortages will not be an issue because of the high level of produce which originates in Ireland.
However, the economy would be 4.25pc smaller in 2023 than currently projected. Mr Donohoe said this figure “hides an even larger hit to economic activity in labour-intensive sectors such as agri-food and indigenous small and medium-sized enterprises”.
Current forecasts expect an unemployment rate of 5pc by 2023, but a no-deal Brexit would push that up by two percentage points. A projection that 2.49 million people would be in jobs here by 2023 falls to 2.44 million under the departmental analysis.
“Employment growth would still take place in our economy, but we will have 55,000 fewer citizens working than we would’ve had, had an orderly Brexit and transition period taken place,” Mr Donohoe said.
The minister added large employers do still see positive prospects for jobs and investments in Ireland, however among smaller companies that have to manage their own supply chains into the UK, the level of concern is growing.
“It is important to emphasise that we do have an economy still capable of delivering growth,” he said.
However, every household would see their disposable income reduced as the price of food and clothing rises.
John McCarthy, Chief Economist at the Department of Finance, said many high street chain stores are likely to be affected as around one quarter of imports come from the UK.
The Government has ruled out an emergency budget in the coming months but admit that plans for 2020 and beyond may have to be scaled back. Asked about promised tax cuts, Mr Donohoe said his objectives remain the same.
Article Source: http://tinyurl.com/kbwqb42