Warning of major job losses across Ireland if UK crashes out of EU in weeks
The Central Bank of Ireland said a disorderly Brexit will send shocks to the exchange rate, trade, consumption and investment.
The Central Bank has issued stark warnings and significant job losses in Ireland in the event of a no-deal Brexit.
A disorderly Brexit will send shocks to the exchange rate, trade, consumption and investment, leading to a major deterioration in economic conditions, it warned.
In its latest quarterly bulletin, the bank forecasts 73,000 fewer jobs in Ireland over the next two years.
For the first time the Central Bank has published two forecasts for the Irish economy because of the “extraordinary and unprecedented nature” of Brexit.
The Bulletin has reported that in the event of a Brexit deal, GDP growth is forecast to be 5% in 2019, 4.3% in 2020 and 3.9% in 2021.
A no-deal Brexit, however is forecast to reduce GDP growth to 4.7% in 2019, 0.8% in 2020 and 1.9% in 2021.
A disorderly Brexit would adversely affect the level of employment in the economy compared to a deal scenario, it also found.
The reduction in employment growth in the no-deal forecast would imply 73,000 fewer jobs in Ireland by end 2021.
In the event of a deal, the unemployment rate is forecast to move lower, averaging 4.8% in both 2020 and 2021.
In the event of a no-deal Brexit, the unemployment rate is forecast to rise to 5.8% in 2020 and 6.9% in 2021.
The report stated that if the UK crashes out at the end of the month, the key channels through which the economy will be affected will be through shocks to the exchange rate, trade, consumption and investment.
It would present enormous challenges and result in a significant loss of output and employment compared to a scenario where there is a deal.
However, Brexit is not the only external risk to the Irish economic outlook as the outlook for global economic activity has continued to worsen in recent months.
Given the position of Ireland as a small, highly open economy, the state of global economic conditions has an important bearing on Irish economic performance.
The report stated that risks in relation to trade and taxation also persist.
Director of economics and statistics, Mark Cassidy, said: “While the underlying outlook for growth in the economy remains positive, there are significant domestic and external risks and uncertainties which threaten that outlook, most notably Brexit.
“This is the first time the Central Bank has published two forecasts for the Irish economy, and this is due to the extraordinary and unprecedented nature of the Brexit process.
“In the event that a no-deal Brexit were to occur there would be a significant weakening of activity across many parts of the economy.
“Regions and sectors which are more reliant on trade with the UK and which are more vulnerable to the imposition of tariffs and non-tariff barriers, particularly sectors such as agriculture, food and the broad SME sector, are likely to be more adversely affected.
“In a no-deal scenario, however, significant disruption and the negative shock to economic activity would adversely affect output and employment and the path ahead for the next few years would be very different.”