DUBLIN (Reuters) - Irish consumers could be forced to pay higher prices for everyday items if Britain's exit from the European Union leads to tariffs being imposed on goods coming into the country, a government report said on Wednesday.
Ireland's export-focussed economy is considered the most vulnerable among the EU's remaining members to Brexit due to its close trade links with Britain, putting tens of thousands of jobs and potential economic growth at risk.
Irish exporters are particularly concerned that a "hard Brexit" -- where Britain would leave the EU's single market and customs union -- will lead to a costly rise in tariffs, paperwork and transit times.
However, in its annual national risk assessment report, the government said that tariffs could also have a big knock on effect on goods coming the other way given Irish firms reliance on raw materials from Britain and the presence of so many major British-based retail chains on the Irish high street.
"As the UK is one of Ireland's most important sources of intermediate and consumption goods, the aforementioned concerns (on tariffs) could increase import costs," a draft copy of the report that was published on Wednesday said.
"In the energy sector, for example, Ireland imports around 88 percent of its total energy requirements, mainly through the UK. This could have an inflationary impact, which would see Irish consumers face higher product prices and the cost base for Irish manufacturers rise."
British household names with a major presence in Ireland include Tesco (L:TSCO), the country's second largest supermarket operator, Marks & Spencer (L:MKS), Debenhams (L:DEB) and the Sainsbury-owned (L:SBRY) general merchandise retailer Argos.
So far Brexit has had the opposite effect on prices with a sharp fall in the value of sterling against the euro making imports cheaper for those companies to help keep inflation at near non-existent levels despite a rapid economic growth.