BREXIT IMPORT ANALYSIS

Clíona McDonnell

Economics Division

14th June 2018

This document is part of ongoing Brexit analysis and scenario planning for inputinto larger Government deliberative processes. Unless explicitly referenced byGovernment decision, any proposal contained in this document does notrepresent Government policy and should not be represented as such.

The analysis and views set out in this paper are those of the authors only and donot necessarily reflect the views of the Department of Finance or the Ministerfor Finance.

The authors are economists in the Department of Finance and members of theIrish Government Economic and Evaluation Service (“IGEES”).

Disclaimer

2

Research to understand channels of Brexit impact

Ireland’s import and export exposure to the UK by sector

Ireland’s exposure in an EU context

Focused on goods but services also analysed

Which subsectors are most exposed

Evolution of exposure to UK over time

3

Outline

Goods Trade Exposure of EU-27 to UK

Rank CountryTotal Imports from

UK ($m)UK Share of Total

ImportsTotal Exports to UK

($m)UK Share of Total

Exports

1 Ireland 18,360 24% 16,541 13%

2 Cyprus 427 6% 147 8%

3 Netherlands 26,179 5% 55,175 10%

4 Sweden 7,275 5% 8,179 6%

5 Belgium 17,776 5% 35,417 9%

6 Malta 265 4% 116 4%

7 Denmark 3,520 4% 5,651 6%

8 Spain 12,382 4% 21,204 8%

9 France 21,536 4% 34,446 7%

10 Germany 39,421 4% 94,076 7%

11 Portugal 2,089 3% 3,917 7%

12 Italy 12,169 3% 24,875 5%

13 Finland 1,818 3% 2,585 5%

14 Lithuania 748 3% 1,064 4%

15 Greece 1,293 3% 1,178 4%

16 Rest of EU-27 18,392 2% 40,236 5%

Note: countries ranked by UK share of total imports. Source: UNCTAD

4

Exposure of Irish Goods Sectors

Food and live animals

Animal and vegetable oils, fats and waxes

Commodities and

transactions, n.e.s.

Machinery and transport

equipment

Mineral fuels, lubricants and

related materials

Beverages and tobacco

Chemicals and related

products, n.e.s.

Miscellaneous manufactured

articles

Manufactured goods

Crude materials, inedible,

except fuels

0

10

20

30

40

50

60

70

80

0.0 1.0 2.0 3.0 4.0 5.0

Pro

po

rtio

nal

Exp

osu

re

Size Exposure

Irish Goods Imports Exposures to UK, 2016

Source: UNCTAD

Food and live animals

Beverages and tobacco

Crude materials, inedible, except fuels

Mineral fuels, lubricants and

related materials

Chemicals and related

products, n.e.s.

Manufactured goods

Machinery and transport

equipment

Miscellaneous manufactured

articles

Commodities and transactions, n.e.s.

Animal and vegetable oils, fats and waxes

0

10

20

30

40

50

60

70

80

0.0 1.0 2.0 3.0 4.0 5.0P

rop

ort

ion

al E

xpo

sure

Size Exposure

Irish Goods Exports Exposures to UK, 2016

The size exposure measure is calculated as the value of the exports in each sector to the UK as a proportion of a country’s total exports. The proportional exposure measures represents the proportion of each individual sector’s exports to the UK out of that sector’s global

exports. These two dimensions of exposure give a measure of both the importance of a sector in a country’s overall exports to the UK and the

importance of the UK to that sector

5

Imports (2016) Exports (2016)

6

Exposure to Northern Ireland

Irish Imports from UK Irish Exports to UK

14%

11% 25%

1%

29%

3%

7%

4%

3%

10%

-

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

Proportion of UK Trade with NI

Great Britain Northern Ireland

12%

29%17% 8%

36%

4%

20%

7%

14%

33%

-

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

Proportion of UK Trade with NI

Great Britain Northern Ireland

EU Countries Goods Sectoral Exposures to the UK

- Food and Live Animals (2016)

AustriaBelgium

Bulgaria

Croatia

Cyprus

Czechia

Denmark

Estonia

Finland

FranceGermany

Greece

Hungary

Ireland

Italy

Latvia Lithuania

Luxembourg

MaltaNetherlands

Poland

Portugal

Romania

Slovakia

Slovenia

Spain

Sweden

0

5

10

15

20

25

30

35

40

45

50

0 1 2 3 4 5

Pro

po

rtio

nal

Exp

osu

re

Size Exposure

Austria

Belgium

Bulgaria

Croatia

Cyprus

Czechia

Denmark

Estonia

Finland

FranceGermany

GreeceHungary

Ireland

Italy

LatviaLithuania

Luxembourg

Malta

NetherlandsPolandPortugal

Romania

SlovakiaSlovenia

Spain

Sweden

0

5

10

15

20

25

30

35

40

45

50

0 1 2 3 4 5

Pro

po

rtio

nal

Exp

osu

re

Size Exposure

Source: UNCTAD.

7

Imports Exports

8

Irish Breakdown of Food and Live Animals Product Exposures

Fish, crustaceans, molluscs and preparations

thereof

Miscellaneous edible

products and preparations

Meat and meat

preparations

Dairy products and birds' eggs

Vegetables and fruits

Live animals other than animals of division 03

Sugar, sugar preparations

and honey

Cereals and cereal

preparations

Coffee, tea, cocoa, spices,

and manufactures

thereof

Feedstuff for animals

(excluding unmilled cereals)

0

10

20

30

40

50

60

70

80

90

0.0 0.2 0.4 0.6 0.8 1.0

Pro

po

rtio

nal

Exp

osu

re

Size Exposure

Irish Food and Live Animals Product Import Exposures to UK, 2016

Imports Exports

Source: UNCTAD

Live animals other than animals of division 03

Meat and meat

preparations

Dairy products and birds' eggs

Cereals and cereal preparations

Vegetables and fruits

Coffee, tea, cocoa, spices,

and manufactures

thereof

Feedstuff for animals (excluding unmilled

cereals)

Miscellaneous edible products and preparations

Sugar, sugar preparations

and honey

Fish, crustaceans, molluscs and preparations thereof

0

10

20

30

40

50

60

70

80

90

0 0.5 1 1.5 2

Pro

po

rtio

nal

Exp

osu

re

Size Exposure

Irish Food and Live Animals Product Export Exposures to UK, 2016

9

EU Countries Goods Sectoral Exposures to the UK

- Chemicals and Related Products (2016)

Austria

Belgium

Bulgaria

Croatia

CyprusCzechia

Denmark

Estonia

Finland France

GermanyGreece

Hungary

Ireland

Italy

Latvia

LithuaniaLuxembourg

Malta

Netherlands

PolandPortugal

Romania

Slovakia

Slovenia

Spain

Sweden

0

2

4

6

8

10

12

14

16

18

0 1 2 3 4

Pro

po

rtio

nal

Exp

osu

re

Size Exposure

Imports (2016)

Austria

Belgium

Bulgaria

CroatiaCyprus

Czechia

Denmark

Estonia

Finland

France

Germany

Greece

Hungary

Ireland

Italy

Latvia

Lithuania

Luxembourg Malta

Netherlands

Poland Portugal

Romania

Slovakia

Slovenia

Spain

0

2

4

6

8

10

12

14

16

18

0 0.5 1 1.5 2 2.5 3 3.5 4

Pro

po

rtio

nal

Exp

osu

re

Size Exposure

Exports (2016)

Source: UNCTAD

Imports Exports

10

EU Countries Goods Sectoral Exposures to the UK

- Miscellaneous Manufactured Articles (Consumer Goods)

Source: UNCTAD

Austria

Belgium

Bulgaria

Croatia

Cyprus

Czechia

Denmark

Estonia

Finland

FranceGermany

Greece

Hungary

Ireland

Italy

Latvia

Lithuania

Luxembourg

Malta

Netherlands

Poland

Portugal

Romania Slovakia

Slovenia

SpainSweden

0

5

10

15

20

25

30

0 0.5 1 1.5 2 2.5 3 3.5

Pro

po

rtio

nal

Exp

osu

re

Size Exposure

Austria

Belgium

Bulgaria

Croatia

Cyprus

Czechia Denmark

EstoniaFinland

France

Germany

Greece

Hungary

Ireland

Italy

Latvia

Lithuania

Luxembourg

Malta

Netherlands

Poland

PortugalRomania

SlovakiaSlovenia

Spain

Sweden

0

5

10

15

20

25

30

0 0.5 1 1.5 2 2.5 3 3.5

Pro

po

rtio

nal

Exp

osu

re

Size Exposure

Imports Exports

11

EU Countries Goods Sectoral Exposures to the UK

- Manufactured Goods (Intermediate Inputs)

Austria

Belgium

BulgariaCroatia

Cyprus

Czechia

Denmark

Estonia

Finland

France

Germany

Greece

Hungary

Ireland

Italy

Latvia

Lithuania

Luxembourg

Malta

Netherlands

Poland

Portugal

Romania

Slovakia

Slovenia

Spain

Sweden

0

5

10

15

20

25

30

35

40

45

50

55

0 0.5 1 1.5 2 2.5 3

Pro

po

rtio

nal

Exp

osu

re

Size Exposure

Austria

Belgium

BulgariaCroatia

Cyprus

Czechia

Denmark

EstoniaFinland

FranceGermany

Greece

Hungary

Ireland

Italy

LatviaLithuania

Luxembourg

Malta

Netherlands

Poland

Portugal

Romania

Slovakia

Slovenia

Spain

Sweden

0

5

10

15

20

25

30

35

40

45

50

55

0 0.5 1 1.5 2 2.5 3

Pro

po

rtio

nal

Exp

osu

re

Size Exposure

Source: UNCTAD

Imports Exports

12

EU Countries Goods Sectoral Exposures to the UK

- Machinery and Transport Equipment (2016)

Austria

Belgium

Bulgaria

Croatia

Cyprus

Czechia

Denmark

Estonia

Finland

FranceGermany

Greece

Hungary

Ireland

Italy

Latvia

LithuaniaLuxembourg

Malta

NetherlandsPoland

Portugal

Romania

Slovakia

Slovenia

SpainSweden

0

5

10

15

20

25

0 1 2 3 4 5

Pro

po

rtio

nal

Exp

osu

re

Size Exposure Source: UNCTAD

Austria

Belgium

BulgariaCroatia

Cyprus

Czechia

Denmark

Estonia

Finland

France

Germany

Greece

Hungary

Ireland

Italy

LatviaLithuania

Luxembourg

Malta

Netherlands

Poland

Portugal

Romania

Slovakia

Slovenia

Spain

Sweden

0

5

10

15

20

25

0 1 2 3 4 5

Pro

po

rtio

nal

Exp

osu

re

Size Exposure

Imports Exports

13

Top 30 Most Exposed Import Subsectors to the UK

Note: products under 1% of UK size exposure are not included in analysis. Source: UNCTAD

0 10 20 30 40 50 60 70 80 90 100 110

Ireland: Gas, natural and manufacturedIreland: Live animals other than animals of division 03

Ireland: Dairy products and birds' eggsIreland: Cereals and cereal preparations

Ireland: Essential oils for perfume materials and…Ireland: Paper and paper manufactures

Ireland: Iron and steelIreland: Coffee, tea, cocoa, spices, and manufactures…Spain: Gold, non-monetary (excluding gold ores and…

Ireland: Meat and meat preparationsIreland: Petroleum, petroleum products and related…

Cyprus: Power generating machinery and equipmentIreland: Miscellaneous edible products and…

Ireland: BeveragesIreland: Manufactures of metal, n.e.s.Malta: Paper and paper manufactures

Ireland: Feedstuff for animals (excluding unmilled…Ireland: Non metallic mineral manufactures, n.e.s.

Ireland: Miscellaneous manufactured articles, n.e.s.Ireland: Chemical materials and products, n.e.s.

Ireland: Vegetables and fruitsLatvia: Textiles fibres and their wastes

Slovakia: Gold, non-monetary (excluding gold ores and…Ireland: Plastics in non-primary forms

Ireland: Other industrial machinery and partsIreland: Articles of apparel & clothing accessories

Netherlands: Gas, natural and manufacturedIreland: Specialised machinery

Portugal: Metalliferous ores and metal scrapMalta: Coffee, tea, cocoa, spices, and manufactures…

Proportional Import Exposures to the UK, by Country and Subsector (2016)

Irish import subsector

Irish import subsector also in top 30 most exposed exports

Non-Irish import subsector

13 of the EU’s Top 15 most exposed subsectors to UK

are Irish imports

14

Top 30 Most Exposed Export Subsectors to the UK

Note: products under 1% of UK size exposure are not included in analysis. Source: UNCTAD

0 10 20 30 40 50 60 70 80 90 100 110

Ireland: Cork and woodIreland: Cereals and cereal preparations

Ireland: Vegetables and fruitsIreland: Non metallic mineral manufactures, n.e.s.

Ireland: Live animals other than animals of division 03Ireland: Feedstuff for animals (excluding unmilled…

Cyprus: Gold, non-monetary (excluding gold ores and…Ireland: Cork and wood manufactures (excluding…

Ireland: Petroleum, petroleum products and related…Ireland: Coffee, tea, cocoa, spices, and manufactures…

Ireland: Road vehiclesCyprus: Road vehiclesMalta: Road vehicles

Slovakia: Gas, natural and manufacturedIreland: Meat and meat preparations

Spain: Gold, non-monetary (excluding gold ores and…Cyprus: Dairy products and birds' eggs

Malta: Manufactures of metal, n.e.s.Ireland: Plastics in primary forms

Ireland: Dairy products and birds' eggsIreland: Plastics in non-primary forms

Hungary: Photo apparatus, optical goods, watches and…Ireland: Manufactures of metal, n.e.s.

Belgium: Gold, non-monetary (excluding gold ores and…Latvia: Cork and wood

Ireland: Specialised machineryCyprus: Professional and scientific instruments, n.e.s.

Ireland: BeveragesPortugal: Power generating machinery and equipment

Belgium: Road vehiclesProportional Export Exposures to the UK, by Country and Product (2016)

Irish export product

Irish export product also in top 30 most exposed imports

Non-Irish export product

11 of the EU’s Top 15 most exposed subsectors to UK

are Irish exports

15

Ireland’s Exposure to the UK Over Time

32%

36% 37%

30% 31% 31%30%

32%32%

28%

30%31%

29%30%

28%

26%

23%24%

22% 24% 24%

18% 18% 18% 18%19% 18%

16% 15% 15%16% 16%

15%14%

13%13%

0%

5%

10%

15%

20%

25%

30%

35%

40%

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Imports Exports

Evolution of UK Share of Irish Goods Trade

16

Exposure to the UK Over Time by Sector

Imports Exports

Source: UNCTAD

0

10

20

30

40

50

60

70

2000 2002 2004 2006 2008 2010 2012 2014 2016

Imports

0

10

20

30

40

50

60

70

2000 2002 2004 2006 2008 2010 2012 2014 2016

Exports

10

2000 2002 2004 2006 2008 2010 2012 2014 2016

Chemicals Food and Live Animals MachineryManufactured Goods Minerals Misc. Manufacturing

17

Potential Impact on SMEs

0

2,000

4,000

6,000

8,000

10,000

12,000

Agri/food Pharmaceuticals Othermanufacturing and

construction

Wholesale / retail Services / other

No. of Importing Enterprises by Sector, 2016 (€m)Micro Small Medium Large

0

2,000

4,000

6,000

8,000

10,000

Agri/food Pharmaceuticals Othermanufacturing and

construction

Wholesale / retail Services / other

Value of Import Trade by Sector, 2016 (€m)Micro Small Medium Large

Source: CSO Trade by Enterprise Characteristics Data.

18

Services Trade Exposure of EU-27 to UK

20%18%

16%

13%12% 12% 11% 11% 11% 10% 10% 9% 9% 9% 8% 8% 7% 7% 7% 7% 6% 6% 5%

4% 4% 4% 3%

22%

16% 16% 15% 15% 15%13%

12% 11%10% 9% 8% 8% 8% 8% 8% 8% 7% 7%

6% 6% 5% 5% 5% 4% 4% 3%

Source: Eurostat Balance of Payments.

Imports

Exports

Exposure of Irish Services Sectors

19

Imports (2016) Exports (2016)

Transport

Tourism and travel

Communications

Insurance

Financial services

Computer services

Royalties/licences

Other business services

Other services

Repairs and processing

0

5

10

15

20

25

30

35

40

45

50

0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 5.0

Pro

po

rtio

nal

Exp

osu

re

Size Exposure

Transport

Tourism and travel

Communications

Insurance

Financial services

Computer services

Royalties/licences

Other business services

Other services

Repairs and processing

0

5

10

15

20

25

30

35

40

45

50

0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 5.0

Pro

po

rtio

nal

Exp

osu

re

Size Exposure

Source: CSO Balance of Payments.

EU Countries Services Exposures to the UK

- Financial Services (2016)

20

AustriaBelgium

Czech Republic

Denmark

Estonia

Finland

France

Germany

Greece

Hungary

Ireland

Italy

Latvia

Lithuania

Luxembourg

Netherlands

Poland

Portugal

Slovakia

Slovenia

Sweden

0

5

10

15

20

25

30

35

40

0 2 4 6 8 10 12

Pro

po

rtio

nal

Exp

osu

re

Size Exposure

Austria

Belgium

Czech Republic

Denmark

Estonia

Finland

FranceGermany

Greece

Hungary

Ireland

Italy

LatviaLithuania

Luxembourg

Netherlands

Poland

Portugal

SlovakiaSloveniaSweden

0

5

10

15

20

25

30

35

40

0 2 4 6 8 10 12

Pro

po

rtio

nal

Exp

osu

re

Size Exposure

Imports Exports

Source: OECD EBOPS 2010.

EU Countries Services Exposures to the UK

- Insurance (2016)

21

Imports Exports

Source: OECD EBOPS 2010.

Austria

Belgium

Czech Republic

Denmark

Estonia

Finland

France

Germany

Greece

Hungary

Ireland

Italy

Latvia

Lithuania

Netherlands

Poland

Portugal

Slovakia

Slovenia

Sweden

0

5

10

15

20

25

30

35

40

45

0.0 0.5 1.0 1.5 2.0

Pro

po

rtio

nal

Exp

osu

re

Size Exposure

Austria

Belgium

Czech Republic

Denmark

Estonia

Finland

France

Germany

Greece

Hungary

Ireland

Italy

Latvia

NetherlandsPoland

Portugal

Slovakia

Slovenia

Sweden

0

5

10

15

20

25

30

35

40

45

0.0 0.5 1.0 1.5 2.0

Pro

po

rtio

nal

Exp

osu

re

Size Exposure

EU Countries Services Exposures to the UK

- Telecommunications, Computer and Information Services (2016)

22

Imports Exports

Source: OECD EBOPS 2010.

Austria

Belgium

Czech Republic

Denmark

EstoniaFinland

FranceGermany

Greece

Hungary

Ireland

Italy

Latvia

Lithuania

Netherlands

Poland

Portugal

SlovakiaSlovenia

Sweden

0

5

10

15

20

25

30

35

40

0 1 2 3 4 5

Pro

po

rtio

nal

Exp

osu

re

Size Exposure

Austria

Belgium

Czech Republic

Denmark

Estonia

Finland

France

Germany

Greece

Hungary

IrelandItaly

Latvia

Lithuania

Netherlands

PolandPortugal

SlovakiaSlovenia

Sweden

0

5

10

15

20

25

30

35

40

0 1 2 3 4 5

Pro

po

rtio

nal

Exp

osu

re

Size Exposure

Source: OECD EBOPS 2010.

Ireland is a substantial outlier amongst the EU-27 in terms of its trade exposure to the UK.

Ireland's goods import exposures to the UK are even more pronounced than its export exposures.

While export exposure is in concentrated in certain sectors, import exposure is spread across a broad range of sectors:

Food and Live Animals, Machinery and Transport Equipment, Chemicals, Manufactured Goods, Miscellaneous Manufacturing Articles and Mineral Fuels

The high import exposures highlight the potential disruption to Irish supply chains, particularly for the retail, agri-food and pharma-chemsectors.

Across the EU-27, thirteen of the top fifteen subsectors most exposed to imports from the UK are Irish, and eleven of the top fifteen export subsectors are Irish.

Ireland’s goods exposure to the UK has been declining over time.

Regarding services, Ireland is considerably less exposed to the UK with regard to imports than exports.

23

Summary

Department of Finance Brexit webpage http://www.finance.gov.ie/what-we-do/brexit/

Brexit: Analysis of Import Exposures in an EU Context – March 2018

UK EU Exit: Trade Exposures of Sectors of the Irish Economy in a European Context – September 2017

UK EU Exit – An Exposure Analysis of Sectors of the Irish Economy – March 2017

Modelling the Medium to Long Term Potential Macroeconomic Impact of Brexit on Ireland – November 2016

Research

24