The International Monetary Fund (IMF) has warned that the Irish economy would face a significant negative hit, following Britain’s expected exit from the European Union (EU).
The IMF stated in its annual report that although Ireland’s economy had been the best performing in the EU in the last three years, expected barriers to trade would significantly damage traditional sectors.
Ireland is widely considered the most vulnerable among the bloc’s 27 remaining members to Brexit due to its close trading links with Britain.
The report noted that: “While the impact to date has been modest, the overall effects over the medium term are expected to be negative and significant. Risks are most acute for traditional sectors that depend on trade with the UK, with potentially sizable consequences for activity and employment outside of the main urban centres.”
The report also noted that as one of Europe’s most open economies with one of its lowest corporate tax rates, Ireland would face uncertainty due to planned tax reforms in the U.S. and EU.
It urged the country to continue the efforts to broaden its tax base.
“The government should avoid using temporary revenue gains, such as a recent surge in taxes paid by U.S. technology multinationals to justify long-term tax cuts or spending increases”.