“A deeper recession with wider divergence”, warns the latest European Economic Forecast

Jul 13, 2020

Released earlier this week, the European Commission’s Summer 2020 Economic Forecast has forewarned that the EU economy will experience a deep recession this year due to the COVID-19 pandemic, despite the swift and comprehensive policy response at both EU and national levels.

How are the numbers looking for Ireland?

As per the forecast, Ireland’s economy is set to shrink by 8.5 per cent in 2020 and is predicted to only rise up to 6.3 per cent in 2021. This compares with the Commission's Spring forecast of a downturn of 7.9 per cent for this year and a recovery of 6.1 per cent for next year.

 

What was the major impact on Ireland?

The forecast has stated that economic activity in Ireland is expected to have plunged in the second quarter of the year due to the COVID-19 pandemic and its associated lockdown. Private consumption is set to be particularly hit due to the measures.

 

Is Brexit contributing to the predicted economic downturn in Ireland?

Ireland’s economic outlook remains affected by specific uncertainty concerning the future relationship between the EU and the UK, potential changes in the international taxation environment and the activities of multinationals registered in Ireland.