ifo Institute: Hard Brexit Would Hit Ireland Hardest
A hard Brexit would hit the Irish economy hardest. According to figures from the ifo Institute, prosperity levels would fall by 8.16 percent in Ireland, by 5.23 percent in Luxembourg, and by 5.19 percent in Malta in the event of a hard Brexit. In the United Kingdom itself, prosperity would fall by 2.76 percent.
“A hard Brexit would impact different EU member states to varying degrees,” says Marina Steininger, a researcher at the ifo Center for International Economics and a co-author with Jasmin Groeschl and Gabriel Felbermayr (now at IfW Kiel) of the paper. It is also possible that uncertainties for investors and shifting exchange rates will deepen the negative impact. “A free trade agreement would definitely soften the blow,” Steininger adds.
If the UK leaves without an agreement, other countries that stand to suffer include the Netherlands (−1.64 percent), Belgium (−1.40 percent), and Cyprus (−1.37 percent). Denmark would take a hit of −0.89 percent, Sweden −0.75 percent, Germany −0.72 percent, France −0.52 percent, Italy −0.40 percent, Spain −0.39 percent, Austria −0.35 percent, and Switzerland −0.01 percent.
“The effects of a hard Brexit on the rest of the world are limited,” Steininger says. Its impact would be −0.01 percent on the United States, −0.04 percent on Turkey, and −0.03 percent on South Korea. But other countries stand to gain from a hard Brexit, such as Taiwan (+0.13 percent), China (+0.05 percent), India (+0.02 percent), and Russia (+0.01 percent).
Publication
Quantifying Brexit: From ExPost to Ex Ante Using Structural Gravit
Felbermayr, Gabriel / Gröschl, Jasmin / Steininger, Marina
CESifo Group Munich, Munich, 2019
CESifo Working Paper No. 7357
