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Irish bank warns of Brexit's 'big shock'

The Central Bank of Ireland has warned that Brexit could lop as much as six percentage points off growth in the next two years and send house prices lower.

The Irish economy has continued to grow strongly, data from the Republic's Central Statistics Office (CSO) showed yesterday.

Its data showed that the Irish economy is €12bn larger than thought, after an estimate of gross domestic product growth in 2018 was raised to an eye-watering 8.2% from 6.7%.

But the bank has warned a negative shock could create a double hit to house prices. Owner occupiers' wages would be hit and negative investor sentiment towards the Republic and Irish property could hit demand from foreign investors.

The Central Bank said even ahead of the UK's EU exit, risks are building in the financial sector, although they were not at a critical level.

Sharon Donnery, who is acting central bank chief, warned in the report that Ireland was "more sensitive to developments in the global cycle" and more prone to economic shocks.

The bank's Financial Stability report said Brexit had the power to deliver a big shock to financial markets that could hit banks that have made loans to the many small companies. And small companies which export to the UK are at risk from hefty tariffs, the Central Bank said.

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