Ireland will be harder hit economically than the United Kingdom after Brexit, the Government has been told in a confidential report.

The document also lists the countries Ireland can recruit as allies in EU negotiations on Britain’s withdrawal, and how their economies will be affected by a so-called soft Brexit or if the UK leaves the EU without a deal.

It says its findings should not be published or subject to the Freedom of Information Act because it could “reasonably be expected to affect adversely Ireland’s international relations”.

The document warns in bold text: “This material should not, therefore, be shared outside the Government.”

The research, obtained by The Irish Times, was carried out by Copenhagen Economics but was not included in a report from the company recently published by the Government on how various Brexit scenarios could affect Ireland.

It measures the effect of a so-called “soft Brexit” on various economies, as well as the effect of Britain leaving the EU without a deal and reverting to World Trade Organisation (WTO) rules.

Status

A soft Brexit arrangement would see Britain remain with a similar status to the one currently held by Norway, which is a member of the European single market through the European Economic Area (EEA).

The report contrasts how different countries – or “potential allies” – whose interests may be aligned with Ireland such as Belgium, the Netherlands, Lithuania, Poland, Denmark, Germany, Spain and France would be affected in either scenario.

“The study also included confidential research on Ireland’s potential allies which is not intended for publication given bilateral and EU27 sensitivities,” it says.

It adds, however: “Perhaps even more sensitive in nature, and not included in the published report, the research suggests that the cumulative negative economic impact on the UK by 2030 in the range of 2 per cent of GDP (under an EEA scenario) to 5 per cent (under a WTO scenario) – showing the UK economy to be less damaged by Brexit than Ireland.”

Worst affected

Of the potential allies for Ireland, it shows that Belgium is worst affected, with its GDP coming in 2.9 per cent lower than forecast under a no-deal Brexit and 1 per cent under a soft Brexit; for the Netherlands it would be 1.8 per cent or 0.7 per cent lower, and in Lithuania it would be 1.3 per cent or 0.6 per cent lower.

In contrast, the GDP of both Spain and Germany will reduce by 0.7 per cent while France would take a hit of either 0.5 per cent or 0.2 per cent.

According to the report, Britain’s GDP would come in 5 per cent or 2 per cent lower than forecast while for Ireland it would be 7 per cent or 2.8 per cent.

“The data shows that in the case of large countries such as Germany and France, the impact of Brexit on their macroeconomic outlook is relatively limited and the difference between an EEA-type outcome and worst case WTO outcome is muted. This in turn may affect their negotiating stance.”