31 Mar Central Bank: Brexit Will Hurt Irish Economy
In recent comments on the performance of the Irish economy, the Central Bank of Ireland (CBI) has warned about the fallout from Britain’s decision to leave the EU. According to the Central Bank of Ireland, the economic impact is expected to be both ‘negative and material’ for Ireland.
It has been difficult for economists to estimate how Brexit will affect Ireland. The long term consequences will be influenced by the withdrawal agreements between the EU and the UK. Recent reports in the media suggest that Theresa May will invoke Article 50 before the 2017 French and German elections.
Any changes to the free movement of goods, services, capital and labour will have an impact on Ireland. But to what degree has been hard to quantify.
With upcoming discussions set to take place, there will be a period of uncertainty amongst companies and investors across Ireland and the UK. As a result, the CBI has revised Irish GDP growth down to 0.2 and 0.6% in 2016 and 2017, respectively.
There are opportunities for Ireland as the UK prepares to leave. Commentators such as the ESRI have suggested that Brexit may influence global insurers to base EU operations in Ireland to avoid the legal and administrative complications of working out of the UK.
The restriction on free movement of labour will also have a significant impact on the insurtech industry. With start-ups finding it difficult to find talent in the UK, Ireland may become an attractive place to set up business considering the strong base of IT companies already in existence at Dublin’s Silicon Docklands.
In terms of Irish government policy, the key is to develop a path for Ireland which provides stability and reduces uncertainty.