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Wise to assume no-deal Brexit – Central Bank governor


It is now wise to assume that the UK will crash out of the EU at the end of the year without a deal and that Ireland will suffer a significant economic hit as a result, the governor of the Central Bank Gabriel Makhlouf has said.

Speaking at a webinar event hosted by the Institute of International and European Affairs (IIEA), Mr Makhlouf said the Central Bank’s latest quarterly bulletin has an assumption that some sort of trade agreement would be negotiated between the UK and the EU.

However, he indicated that was no longer the bank’s assumption.

“It would be wise to plan on the basis that there won’t be a deal and that there will be a hit of between 1 to 2 per cent of GDP [gross domestic product],” he said.

The UK threw the Brexit talks into disarray last week by proposing legislation that would break international law by breaching parts of the Withdrawal Agreement which it signed in January.

Prospect

The souring atmosphere has increased the prospect of the UK exiting the transition period at the end of the year without an agreement.

The Central Bank believes the Irish economy will contract by 1-2 per cent in such a scenario. This would significantly amplify the shock to the economy from Covid-19.

“One of things I have been worried about for a while was that too many people were hoping that the transition period would carry on forever,” Mr Makhlouf siad.



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