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A "no agreement" Brexit, under which the UK leaves the EU without a withdrawal agreement, would mean that the Irish economy would face the costs of leaving the UK much sooner warned the Central Bank. The central bank warned that this would cause a significant short-term disruption and said the government and businesses needed to prepare.
The Central Bank says its forecast for the economy is still at a strong growth this year, risks to the outlook are increasing due to Brexit, trade tensions and changes in the international trading regime. corporate taxation. This means that government policy should not take optimistic growth prospects for granted.
The Central Bank has already predicted that a tougher version of Brexit could cost 40,000 jobs over the next decade.
In particular, the bank says it sees the possibility for the government to move the treasury in surplus next year, which would mean a tighter budget package in October than expected. Currently, the government bases its budget on a deficit of 0.1% for 2019.
The Central Bank has already predicted that a tougher version of Brexit could cost 40,000 jobs over the next decade and leave 3% smaller economy In a note on its latest quarterly comment, released Tuesday, Mark Cbadidy, director of the economy and statistics bank, said that if a Brexit without negotiation there appeared that he would "charge" more the costs of leaving the UK in the next few years.
Withdrawal Agreement
The current forecast of the bank is based on the signing of a withdrawal agreement and a transition period in March, when the UK leaves the EU, protecting trade by paralyzing the current rules until the end of 2020. A departure from the United Kingdom without a withdrawal agreement would result in "a significant negative disruption. Sectors exporting to the United Kingdom or exposed to new tariffs or barriers to trade. trade, such as agriculture, would be particularly threatened.
The risks of a Brexit without trading seem to have increased in recent weeks, with significant political upheaval. United Kingdom and difficulties in reaching a withdrawal agreement under which the United Kingdom would leave on a planned basis.
The risk remains that a strong and continuous expansion may lead to overheating
The Central Bank expects GDP growth of 4.7 percent this year and 4.2 percent next year. Employment growth is expected to remain strong, but is expected to slow in 2019, with an average unemployment rate of 5.4% this year and 4.8% in 2020.
Falling unemployment [19659007] While Cbadidy said the bank did not believe the economy was overheating at the moment, strong growth and falling unemployment rates meant a risk for the next few years.
"As the economy turns to full capacity over the next year, this strong expansion could lead to overheating," the bank said. He believes that, in this context, the government should fund new investments in infrastructure by spending less in other places or raising taxes rather than borrowing to limit the risk of overheating.
Given the economic risk, Cbadidy is confident in the central forecast that growth will continue strongly.
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