UK EU Exit: Trade Exposures of Sectors of the Irish Economy in a European Context

This paper examines the trade exposures of sectors of the Irish economy and other European Union (EU) Member States to the United Kingdom (UK) in light of the UK’s decision to exit the EU. This is done by applying sectoral size and proportional exposure measures to the UK across EU countries. The results show that Ireland is substantially more exposed in a number of the goods sectors, this is particularly marked in Agri-food. In services Ireland is in the upper range of the most exposed Member States, particularly in Financial Services. Disaggregating from the sector to the product level the analysis reveals that eleven of the top fifteen proportionally most exposed goods products to the UK are Irish exports and are predominantly from the Agri-food sector. It is also seen that contrary to the trend decline in the importance of the UK as export destination for overall Irish exports, the UK’s export share has actually increased in a number of sectors over the past 15 years, including the Agri-food sector.

Next, the paper computes the revealed comparative advantage (RCA) for a number of sectors in Ireland, the UK, and internationally. A comparisons of these sectors with Ireland’s sectoral exposures indicates there is a strong overlap between the most exposed sectors of the Irish economy and the UK’s comparative disadvantage. This reveals a potential vulnerability for Irish exporters if the UK were to agree free trade agreements for third country imports in these sectors, increasing competition in the UK market.

This publication is available here.

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