While the UK government has been preparing to begin the negotiations with its plan to leave the EU, some areas of the Irish economy has seen to face a tough road ahead of them.
The Irish government has outlined a study that shows which sectors of the economy will be the most affected and exposed by UK's exit from the EU, along with the Irish government's announcement of the budget for 2017 in October.
Through the use of the 'Exposure Index' created by the Irish Department of Finance, Transport, Commodities n.e.s., Food and Live animals, Manufactured Goods and Minerals are the five most exposed sectors.
One of the most notable features of the PMI surveys is that they have the capability to provide the opportunity to look further to be able to see the reactions for certain types of companies, such as firms in specific sectors or of specific sizes. It can be therefore aimed to segregate the responses on PMI for such sectors which are outlined in the Irish government's study.
The output in the sectors that have been 'Most Exposed' were strongly increasing on a monthly basis earlier than the UK's referendum by the end of the month of June. Nevertheless, during the months subsequent to the 'leave' vote, the expansion rate alleviated in three successive months prior to paving a way to an absolute refusal in business activity in the month of October. Since April 2013, this was the only monthly fall in output in more than two and a half years and at the same, the strongest recession.
This result suggests that the impact of the Brexit vote on the 'Most Exposed' sectors has been immediate and at the same time, significant.
Since the month of June, the Output Index for the sectors that are 'Most Exposed' has shown a loss of 8.8 index points. Meanwhile, with the months of September and October where growth in the less exposed parts of the economy are actually seen, the equivalent drop n the 'Less Exposed' index has been smaller with 1.5 index points.
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