Brexit represents far-reaching challenge for Ireland: IMF

The International Monetary Fund (IMF) on Friday warned Brexit represents the most pressing and far-reaching challenge for Ireland.

"While the impact to date has been modest, the overall effects over the medium term are expected to be negative and significant," the IMF said in its latest country report on Ireland.

"Risks are most acute for traditional sectors that depend on trade with the UK, with potentially sizable consequences for activity and employment outside of the main urban centers," it said.

In the country report, the IMF mentioned the ongoing changes in corporate taxation at the international level and discussion of further reforms in the United States and the European Union, saying that these contribute to uncertainty in Ireland given the sizable role of multinationals in the Irish economy and their substantial contribution to the tax base.

Britain announced reductions to its corporation tax rate, while U.S. President Donald Trump has signalled his desire to more than halve the U.S. rate from 35 percent to 15 percent.

Ireland's 12.5 percent corporation tax rate is very low and is often cited as an example of tax competition, because it is used as an incentive for foreign companies to invest in the country. But Ireland says the corporate tax rate remains and will remain a cornerstone of the country's industrial policy.

"This further reinforces the need for a broad tax base, large fiscal buffers, and continuing efforts to reinforce the dynamism of the domestic economy," IMF said.

It also said uncertainty related to calls for a retreat from global integration is particularly relevant for Ireland, given the open nature of the Irish economy. Endit