National debt in the Republic could soar in a no-deal Brexit
Ireland's national debt remains higher per head than anywhere else in Europe and could soar to perilous levels following a crash-out Brexit or other external shock, the Irish Central Bank has warned.
The report by Central Bank economists urges the Irish Government to take stronger measures to reduce debt, citing what they call "an environment of elevated risks".
The authors note that, while Ireland has sharply pruned its debt-to-growth ratio since exiting the troika bailout in 2014, this performance is driven by exceptionally high growth rates and low interest rates combined with once-off sales of state assets, particularly from Nama's property portfolio.
Despite that improved ratio, they note, national debt today remains above 100% of gross national income, considered the most accurate measure of Ireland's economic activity.
In per-capita terms, the debt mountain has more than doubled over the past decade to €44,000 (£39,000) per man, woman and child, higher than any of Europe's other deeply indebted nations.
The economists forecast that, if the UK leaves the EU without agreement, Ireland would be forced back into deficit spending and its debt ratio would remain stubbornly high through to 2025.
Higher spending on unemployment benefits and debt financing combined with lower tax takes would add €22bn (£19.5bn) to the national debt by then.
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The report offered another external-shock scenario: the sudden loss of €3bn (£2.7bn) in corporation tax, considered a possibility in several recent forecasts from the IMF, Irish Fiscal Advisory Council and others that have highlighted the Republic's unprecedented reliance on tax collections from a handful of tech giants.
This shock, on its own, might drive up Ireland's debt ratio by around 10 percentage points - but much more if accompanied by Brexit and a global economic slowdown.
"In reality, economic shocks can sometimes occur simultaneously.
"If this materialised, the effects on the economy and public finances would be magnified compared to the results we report," they wrote.
The authors called on the Irish Government not to spend the current unexpected extra billions being collected from multinationals and instead to use that money to pay down debt.