Frontier report finds Brexit may disrupt Ireland’s digital sector

Technology Ireland today published a report by Frontier Economics assessing Brexit’s potential impact on Ireland’s digital sector. Technology Ireland is the largest business organisation representing Ireland’s technology sector.

Ireland’s digitally-intensive sectors, such as computer and electrical equipment, IT services and telecommunications, play a key role in the Irish economy, accounting for about €30 billion (13% of the Irish GDP). These sectors are heavily trade dependent and account for around one quarter of all Irish exports. Future post-Brexit arrangements with the UK may have wide ranging impacts on the sector. Technology Ireland commissioned Frontier to identify risks and opportunities that Brexit poses to the Irish digital sector and policy actions that could mitigate those risks.

The report finds that cross-border links with the UK may be disrupted or adversely affected by Brexit. In particular, our analysis identifies risks around market access to services, data access and privacy, R&D collaboration, regulatory divergence and investment. If Brexit leads to increased costs for these activities, the competitiveness of the Irish tech sector may be reduced and / or activity diverted away from Ireland.

While the disruption may be substantial, findings also suggest that negative effects could be partially compensated for by diversion of investment from the UK to Ireland. Whether such opportunities are sufficient to offset the disruptive effects of Brexit on Ireland’s digital sector is however unclear. The overall impact will be driven not only by the final arrangements agreed by the EU and the UK, but also by Ireland’s domestic policy response and its ability to maximise the opportunities that are presented.

To mitigate the impact of Brexit on Ireland’s digital sector, and maximise potential opportunities, our report highlights the following three domestic policy responses:

  1. Growth capacity: Ireland needs to ensure it has the capacity to grow should investment be diverted from the UK to Ireland. This includes investment in areas such as infrastructure gaps, and policy frameworks to allow for additional housing or skills shortages.
  2. Increased R&D capacity: Ensuring the necessary funding is in place to grow the capacity of the R&D sector in Ireland, including investment in R&D infrastructure, skills, and research frameworks.
  3. Diversify and strengthen partners and collaborators: Ireland should strengthen the existing cooperation between Europe’s ‘Digital Frontrunners’ in order to help shape the European regulatory direction in a way which will maximise the growth potential of its digital market

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