We ‘could lose as much as UK from no-deal Brexit’

IRELAND could lose as much as the UK might do economically in the event of a no-deal Brexit, a stark report has warned.

Credit rating agency Moody’s issued the briefing yesterday and said the risk of a no-deal exit from the EU had ‘risen materially in recent months’ and could possibly see the UK fall into recession.

Ireland, together with The Netherlands, Cyprus, and Malta, could suffer consequences, particularly in areas such as trade, with the ratings agency saying that Ireland ‘could bear a loss in output commensurate with that of the UK’.

Trade between the UK and Ireland accounted for 13.1% of Irish domestic economic output with Belgium and The Netherlands slightly behind at 10.1% and 9.6% respectively, it said. The report said the severity of Brexit all depends on the final deal worked out between the UK and EU, but a no-deal scenario would have a significant adverse impact.

‘We still think the UK and the EU will eventually reach an agreement to preserve many, but not all of their current trading arrangements, particularly around trade in goods,’ said Colin Ellis, Moody’s chief credit officer EMEA and co-author of the report. ‘However, we believe the prospect of the UK leaving the EU without any agreement has risen materially.’

According to the report, a no-deal Brexit would likely see a sharp fall in the value of sterling which would have a knock-on effect on inflation and wages there leading to lower consumer spending and depressed growth.

However, the ratings agency said that smaller countries such as Ireland could benefit from the falling value of the pound, leading to cheaper imports from the UK.

In light of the report, Fianna Fáil Brexit spokeswoman Lisa Chambers called for cool heads to prevail ahead of the October deadline for a deal between the UK and EU on Britain’s withdrawal from the bloc.

Ms Chambers said: ‘The deadline for reaching a deal on the withdrawal agreement is fast approaching and it is imperative that the Government exercises caution in the coming weeks.

A lot of work remains to be done to resolve outstanding Irish issues.’

She added that a no-deal scenario was in nobody’s interest and would cause ‘profound economic harm to Ireland’.

‘Ireland stands to be affected by Brexit more so than any other EU member state and faces a unique set of challenges.

‘It is therefore imperative that the Government does not assume that all can be resolved during the negotiations on the future trading relationship that are due to take place during the transition period.’

An EU summit set for October 18 and 19 is being seen as the most likely opportunity for an agreement to be on Brexit and for a statement on the shape of future relations to be released.

‘It’s time for cool heads’