Quantifying the impact of Brexit on the Republic’s economy at this stage is like trying to measure the impact of rainfall on the Irish psyche. We know it’s likely to be profound, but who can really say for sure.
Up to now Brexit has been filtered through a series of warnings about what might happen, but there has been little in the way of hard data. The latest quarterly accounts from the Central Statistics Office (CSO), however, went some way to remedying that.
A €300 million squeeze on excise duty receipts in the second quarter of this year is blamed on a pick-up in cross-Border shopping, triggered by a weaker sterling which has been 15-20 per cent down against the euro since last year’s Brexit referendum.
A previous study linking a rise in traffic volumes across the Border to the slide in sterling hinted at the trend without quantifying it.
Whether it persists or even accelerates will be dictated by the undulations of sterling, which are being driven by a number of currents not least Theresa May’s rather opaque utterances on Brexit, which seem to generate more heat than light.
In 2009, the last time the euro and sterling flirted with parity, there was a major pick-up in cross-Border shopping, and an equal and opposite reduction in retail trade in the South.
A repeat of this could seriously hamper recovery in the Republic’s retail sector, which was the slowest part of the Irish economy to recover from the crash and is still perpetuated, in many cases, by discounting rather than a pick-up in spending power.
The other Brexit-led trend in the CSO’s numbers was the decline in consumption, a key driver of domestic activity.
Consumption in goods and services fell 1.1 per cent in the quarter on the back of a fall-off in new car sales and a significant rise in used imports from the UK. Experts suggest Irish consumers are ditching the purchase of mainstream models here in favour of buying used, premium brands in the UK.
To date the Brexit factor has not really affected the State’s headline economic numbers. Having said that, we’re only at the beginning of the process.
