New research warns a no-deal Brexit may cause a recession in Ireland 3 months ago

New research warns a no-deal Brexit may cause a recession in Ireland

An increase in property tax in Ireland is suggested to counteract the potential economic downturn.

A new report by the Nevin Economic Research Institute (NERI) indicates that a no-deal Brexit may result in a recession for the Irish economy.

However, even without Brexit, the Irish economy is reported to be on the cusp of "overheating".

NERI's Summer 2019 Quarterly Economic Observer was published on Thursday morning, and in it, the short-term economic outlook for Ireland is positive, although it also points towards an eventual downturn if a no-deal is passed.

2019 should see a 4.6% growth in Ireland's GDP, followed by a growth of around 3% in 2020 and 2021.

It is also predicted that employment will rise by over 100,000 over the next two years, dropping the unemployment rate to approximately 4.3% in 2020.

However, the report warns that a no-deal Brexit would cause economic growth to drop anywhere between one and four percentage points lower, and that it could push the country marginally into recession.

NERI claims that significantly stockpiling ahead of the potential 31 October deadline for a no-deal Brexit could deter a lower growth at the end of this year, while an increase in property taxes could assist in the longer term.

As per the report, Irish property taxes are significantly lower than elsewhere in the EU, and if they were brought in line with the European standard, the Irish government could be collecting an extra €1.5 billion every year.