According to the forecasts of the Bank of England, the crash of the pound sterling would crush Irish exports

The Bank of England, in its latest badysis, brutally described the economic crisis that could be caused by a Brexit without agreement, indicating a brutal crash that would inevitably affect Ireland and the United Kingdom. The most notable aspect of the bank's latest badysis is its estimate that, in the worst case scenario, the pound could collapse to 25%. Although the exact reaction of the euro is unclear, the sterling could fall to 110 pesos, causing considerable damage to many Irish exporters and heavy job losses here.

Various forecasts in the Dominican Republic and the UK have examined the impact of a so-called hard Brexit involving new barriers to trade. For Ireland, it is estimated that a hard-Brexit would cost between 4.5 and 7% of GDP, but over a long period. What is new in the Bank of England's estimate is the speed with which it suggests that the economic cost could be paid in the worst case in which the UK would collapse in March this year. without the signing of a withdrawal agreement, the UK GDP being 8%. cent in 2019 and an immediate collapse in the pound sterling. This would mean huge problems for Ireland.

The Bank of England has a hard time saying that this is not a forecast of what would mean a Brexit without a transaction, but a reasonable estimate of the worst case scenario, undertaken to judge how the British banks would answer. And it is not pretty. In the worst case, it implies immediate trade barriers between the EU and the United Kingdom and a failure of the capacity of British ports and customs to cope with sudden changes, giving an impression similar to what was observed at the beginning of the financial crisis.

Very difficult 2019

If the UK faces the price of Brexit, it will be the Republic. According to previous estimates, Brexit could at least reduce by one percentage point a year our growth rate over a period of five to seven years and cost 40,000 jobs. But these forecasts were generally based on an exit involving a two-year transition period. If the pain comes immediately via a Brexit without an agreement next March, the Irish economy will face a very difficult 2019 year, with huge implications for employment, growth and public finances.

The Bank of England study will inevitably increase pressure on the Irish government to describe how it would deal with a non-agreement scenario. A collapse in the value of the pound sterling would put pressure on measures to support exposed companies and preserve jobs in exposed sectors. The likely impact on Irish growth, although it is impossible to estimate exactly the UK figures, would be very substantial if the result were close to the worst of the scenarios described by the Bank. 39; England.

It is almost impossible to predict the economic results of Brexit given the immense uncertainty of what will happen. However, the Bank of England has highlighted a key problem: the price could be paid very quickly in the worst case. And, for the moment, the worst case remains possible.