The Irish Central Bank said that the UK’s non-agreement to leave the EU will pose a “great challenge” to the Irish economy, so that next year’s economic growth rate will drop to only 0.8%. This is the most detailed forecast by the Bank of Ireland to date on the potential risks of hard Brexit.
Ireland has close trade relations with the UK and shares land borders. It is believed that Ireland’s fast-growing economy is more vulnerable to the Brexit shock than other European Union member states.
Reuters reported that the Irish central bank’s next-year economic forecast for Britain’s Brexit without a transitional period on October 31 is similar to the official forecast that the government’s gross domestic product growth rate will reach 0.7%. When Finance Minister Paschal Donohoe proposed the 2020 “no agreement” Brexit budget, it was based on this forecast.
However, the Irish central bank is less optimistic about the future economic outlook. It is predicted that in the absence of an agreement to leave the EU, compared with the government’s forecast of 2.5%, the Irish economic growth rate will rise to 1.9% in 2021, and the unemployment rate will be two years. The inside climbed to 6.9%, while the Treasury’s forecast was 5.9%.
The Irish central bank said in its quarterly forecast update report: “Although such forecasts are bound to have great uncertainty, the absence of an agreement to leave the EU will pose a huge challenge, resulting in greater output and employment losses than not leaving the EU.”
The Irish central bank said that this is the first time the central bank announced two such detailed forecasts for the Irish economy. It is estimated that if the agreement can be avoided, the economy will expand by 4.3% next year and 3.9% in 2021.
The Irish central bank predicts that anyway, the economic growth rate will come to or slightly below 5% this year. The adverse effects of non-Agreed Brexit on consumption, investment, exports and imports will all appear in 2020, and all four categories will shrink.