A UNITED Kingdom exit from the European Union would negate any positive benefits of Northern Ireland's 12.5 per cent independent rate of corporation tax, a new report from stockbrokers Davy claims.
And it predicts that the north will face huge hurdles to trading with its nearest neighbours in the Republic - even if a free trade deal is hammered out in the wake of a Brexit.
The report, written by economist Conall MacCoille in advance of the June 23 EU referendum, also paints a grim picture for the north's agricultural sector.
Davy's report concludes that Brexit is "clearly threatening the UK's growth prospects" and says that in the past a single percentage point reduction in UK GDP has led to a fall on 0.3 per cent in Ireland,
It says a sharp depreciation in sterling could also hurt Irish exports (although just 15 per cent of goods now goes to the UK from the Republic, down from 50 per cent in previous decades.
Specifically with regards to Northern Ireland, the Davy report says that while arrangements applying to the movement of people might not be directly affected by Brexit, the UK might have to impose customs controls on the goods trade with the Republic as it would no longer be a member of the EU customs union.
The UK currently accounts for €13.8 billion, or 14 per cent, of Irish goods exports. Of this, Northern Ireland accounts for just €1.7 billion, or 1.6 per cent, of goods exports – a relatively small share.
However, cross-border trade has grown sharply over time, rising from €1.65bn in 1996 to €3bn in 2013. The Republic accounts for close to 33 per cent of Northern Ireland’s goods exports.
"So, the imposition of non-tariff barriers could be particularly costly for Northern Ireland," the report says.
It adds: "A recent report by the Northern Ireland Assembly estimated that the economy there would lose €1bn as a result of Brexit and register a 3 per cent drop in GDP.
"Trade effects, with potential spill-overs onto productivity growth, would again be key factors. Similarly, uncertainty on the UK’s future membership of the EU would undermine the potential benefits of Northern Ireland’s independent corporation tax rate. Attracting FDI into Northern Ireland would clearly be problematic with access to the EU single market at risk.
"Also at risk would be transfers under the EU Common Agricultural Policy (CAP). This has been estimated to provide 82 per cent of farm income in Northern Ireland.
"According to the European Commission, €3bn was expected to have been paid through 2014-20. In the event of Brexit this income stream would be lost, although it could be replaced by the UK Treasury."
Earlier this week employers' group Ibec in Dublin, in its latest Quarterly Economic Outlook, said a British exit from the EU is the biggest current threat to the Irish economy.
Ibec said the mere threat of Brexit has been enough to precipitate a serious drop in the value of sterling and that a vote to leave would prompt a further significant depreciation.
"A UK exit would send Ireland, Britain and Europe into uncharted and treacherous waters," Ibec's chief executive Danny McCoy said.