Grim Central Bank warning on Brexit
Deputy governor Sibley outlines ‘enormous challenges’ facing Republic PricewaterhouseCoopers reiterates view that hard Brexit the most likely outcome
The effects of Brexit on the Republic will be “deeply profound” and in the event of no trade agreement being reached with Britain, the State’s GDP could be 3 per cent lower, costing 40,000 jobs, the Central Bank has warned. Ed Sibley, deputy governor in charge of prudential regulation, delivered stark warnings in relation to Britain’s EU exit yesterday at an event organised by Arthur Cox at the DCU Brexit Institute.
“Brexit could be one of the most significant events to affect the Irish economy and Irish financial services firms in a generation,” he said. “The full significance is almost impossible to predict at this stage.
“Firstly, the decision by the UK to leave the European Union is one that will have knock-on effects for years, even decades, to come. For Ireland, these effects are largely going to be negative and deeply profound.”
Mr Sibley’s warning came as accountancy firm, PricewaterhouseCoopers reiterated its view that a hard Brexit is the most likely outcome in the UK’s departure from the EU.
Mr Sibley said there were “enormous challenges” ahead, and expressed concern that this view “does not appear to be shared by everyone”. Any free trade agreement, he said, could still represent a “substantial loss” of market access, with exporters facing “considerable challenges”. This would be further aggravated by any negative economic shock to the UK economy by reducing consumer confidence. “Taking these factors into account, our estimates suggest that in the event of no post-Brexit trade agreement being reached, GDP in Ireland might be around 3 per cent lower after 10 years than under a no-Brexit scenario,” said Mr Sibley. This figure could be expected to translate into roughly 40,000 fewer jobs, he added.
Separately, PwC has said in a new report that while a hard Brexit is the worst outcome, it remains the most likely.
Feargal O’Rourke, the company’s managing partner said that while a hard Brexit is the worst outcome, it is one companies need to prepare for on the basis of the slow nature of progress. “All in all, on the balance of probabilities, we still think it’ll be a hard Brexit . . . I’m not sure we’re going to see anything for the next two months that would allow us to switch position,” he said, noting that PwC will re-evaluate after the upcoming June summit of EU leaders.
Part of the problem, Mr O’Rourke suggested, is the fact that the message from the UK is mixed. “There are a lot of moving parts and the fact is that the British position is still not entirely clear,” he said, forecasting the UK heading in the direction of a Canadian type free trade agreement.
A hard Brexit would mean the UK would leave the EU at the end of March 2019 without a future trade agreement.