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THE CENTRAL BANK has published its economic forecast for how Ireland would fare in the event of a no-deal Brexit, as one of various possible scenarios that could happen after 29 March.
Among the most extreme effects of a no-deal Brexit as predicted by Ireland’s financial regulator are an “immediate disruption” in financial markets, higher costs and “further falls” in the value of sterling.
The Central Bank said that given that Brexit is “a situation that is without historical precedent”, there is considerable uncertainty around potential Brexit outcomes. In its latest quarterly update, it published an analysis of the possible effects of a no-deal Brexit.
It predicts:
A deterioration in economic conditions and a more adverse outlook which would cause firms to cut back investment and consumers to reduce spending.
Disruption to supply chains and the transportation of goods into and out of Ireland, disrupting production and leading to higher costs.
A reduction in Irish exports due to lower demand from the UK, higher tariff and non-tariff barriers (such as checks and paperwork) and exchange rate effects.
Consequences for the public finances as a result of weaker economic growth.
A reduction in economic growth (GDP) by up to 4 percentage points in the first full year. This would see GDP growth of around 1.5% in 2019 (a figure based on three quarters), meaning employment and growth still remain positive overall.
Over a 10-year period, the level of Irish output could be reduced by around 6 percentage points, though again employment and growth still remain positive overall.
The Central Bank said that it’s forecast would shift depending on when the UK leaves (there’s currently strong indications that there will be an extension); and a possible increase in foreign direct investment.
Preparations for Brexit
The Irish government’s and private businesses’ preparations for Brexit have been somewhat hampered as it’s not certain whether preparations should be for the EU-UK Withdrawal Agreement, a no-deal Brexit, or another unknown option.
The UK parliament voted against the Withdrawal Agreement last week; the opposition to it seem to be mostly to do with the backstop, which has drummed up staunch opposition from within the House of Commons.
If there is no deal, the EU has said that there will need to be basic checks between the EU and UK, which could include checking for animal documentation at the Irish border.
This would impact on farmers: many farming industries, such as the cheese production sector, is an all-island economy and could be delayed by a no-deal Brexit.
If the UK leaves the EU without a deal, this will mean that the British government will have to apply to adopt World Trade Organisation rules.
This will mean that tariffs, or taxes, will have to be introduced by the UK for goods being imported from the EU, and EU member states will do the same for goods being imported from the UK. These tariffs are set rates: for example dairy goods are at 35%, while car imports cost 10% of their value.
In response to the Central Bank’s forecast, Mark Cassidy, Director of Economics and Statistics, said:
“The economy is forecast to continue growing at a relatively solid pace, though this is expected to moderate in line with international economic output and where we find ourselves in the current economic cycle.
“However, a disorderly no-deal Brexit has the potential to significantly alter the path of the Irish economy in both the short and medium term, with a substantial and permanent loss of output.
That said, employment and growth are still expected to remain positive overall, while much work has been done to guard against the risks facing the financial system which the Central Bank overseas.
“Although Brexit continues to dominate headlines, we cannot ignore the other risks facing the economy, such as overheating and the international trade and taxation environment. Our ability to withstand any future downturns in the economy will be greatly enhanced by building up larger surpluses and buffers in the public finances now, especially if a no-deal Brexit can be avoided.”
This is the same central bank that refused to report banks to the authorities for committing fraud on their own tracker mortgage holders, and probably no mortgage holders as well,not a very reliable source .
@@mdmak33: and yet I’d trust it more then the UK government any day of the week.
After all the UK government have no clue what they are doing
@@mdmak33: so what if they didn’t sort out another, unrelated, mess. I rather be informed than not…
The more I read about Brexit the more prepared I will be, if and when it happens. Plus who knows – our economy may bloom, with consumers buying Irish and more support from EU.
@Vic’s Burd: wishful thinking
@Toby Fish: ah be positive!
I think we’re all sick hearing about Brexit.
@Jack: Sick of the lies & bs.
@Colette Kearns: Not lies and bullshit. Do a bit of research.
@Jack: well unfortunately for some of us our jobs will deal with it directly. So it’s better to be informed about it than not.
Our over reliance on the UK is going to be our Achilles heel. We need to look to more diverse markets outside the UK. Brexit may just wean us off our UK dependance, which may be good going into the future.
@Seán Dillon: 13.5% isn’t over reliance. That’s the percentage for 2017. 2018 is less. We’ll be grand.
@Seán Dillon: Hows the Brexit busters coming along lads, you two seriously think Ireland will be a EU priority post Brexit.
@Seán Dillon: this is nonsense. Ireland is overrelient on the eu. And with no strong irish leadership to stand up for irish interests. This country is doomed.
@Paul Furey: Some amazing political analysis there…
@Seán Dillon: it’s gonna be hard to find new markets when other countries are covering their backs as well on their trading partners
@Paul: we’ll be more of a priority to the EU than we will be to Britain.
@Gerard Heery: I agree.
@Stephen Finnegan: Almost 70% of medicines come from Britain. They are stock piling at the moment and we are starting to run low on some stocks. Britain has not left yet and it’s starting to effect us, we are too over reliant on the GB market. I agree our government has been too complacent, thinking that there will be no hard border is nonsense, and not having a strong and meaningful and intelligent agenda to deal with Brexit is disastrous.
@Paul Furey: 70% of medicines come from GB and 43% of agri food business goes to GB. That’s just two sectors.
The central bank has been politically compromised. Report’s giving opinions like this is not within their remit.
If British food/etc cost up imported to Ireland that I wouldn’t buy.i m support buy Irish food support job here
@Brian Flavin: top notch wording
@Brian Flavin: I agree Brian, we produce most of the same foods here, if we support Irish more we can look after our own economy no problem.
Can’t you smell the excuse for higher prices and more tax being softly slid in.
We produce enough to feed ourselves and still export, the UK does not, they import at least 30% of the food required to feed themselves
@Ian McNally: and where do they import it from?
@Toby Fish: Thankfully some Irish Agri business hasn’t been idle in the last two years. The most recent example I know of is Glanbia partnering with a Dutch company (Royal A-Ware) to get over machinery to set up production lines for continental cheeses and to use that companys sales access to market. In Irish food production the fact that we product food to the preferred tastes of the British isles has been a big barrier to continental markets. They prefer different carcass cuts of beef, younger leaner lamb and softer cheeses. Here’s hoping some of the damage to our food sales can be limited by these smart moves.
Our supreme leader and his cohorts have buried their heads up their collective a**e over the whole situation and now we are going to pay the price of their ineptitude! The sure it’ll be grand the EU have our backs is total B.S. Leo gets to swan around looking good for photos and the rest of them have expense accounts and fat pensions, that’s all they care about. We are going to be hung out to dry, they are going to shrug their shoulders and go, “oh well, sure there’s nothing we could do”.
@Sea Graham: Sorry who are you whinging about? Leo? The EU? What exactly are you looking for them to do?
@Sea Graham:
If you were ‘Supreme Leader’ what would you do?
@Ricky Spanish: Eh, lead maybe? They are paid enough to manage the situation on behalf of the people of Ireland.
@David Corrigan: They’ve engaged of 2 years of negotiation in an attempt to protect our interest. They’ve released plans at both national and EU level to help prepare for no deal.
@Sea Graham: any suggestions? List down here what you think should be done. Please, be specific.
After last time, I think we will take central bank advice with a pinch of salt lol
@Adam O’hEidhin: Anyone for Tea.!!
@ÓDuibhír Abú: We Have; ‘ Barry’s ‘.!!
More doom and gloom.
@John Flood: like the millennium bug
British retail chains have been over-charging us for years. If Brexit makes us more inclined to support our own then that will be a good thing.
The Germans will look after their own interests in the end,
It will disrupt small business imports from the UK faced with having to pay VAT on goods which are presently zero rated for EU imports.
have your say