Friends First have today published their Economic Outlook with Chief Economist, Jim Power entitled ‘The Impact of Brexit on the Irish Economy’.
The outlook shows that the strong and broad-based Irish economic recovery in 2015 has continued its momentum so far in 2016 with growth still very positive.
However, there are some tentative signs that growth is easing somewhat. Brexit uncertainty and currency movements are the key contributing factors according to the report.
According to the report, GDP growth of around 4.3% looks achievable in 2016. The impact of positive external factors has been very important to Ireland’s strong recovery over the past couple of years. These are declining oil prices, low interest rates, strength of the euro, positive US and UK economic growth.
However, the report warns that all four are outside Ireland's control and cannot be taken for granted. Two have deteriorated considerably in recent months– sterling has lost 24% of its value against the euro and the UK economy is under Brexit-induced pressure.
Furthermore, the report looked at the housing issue. It claims the lending regulations introduced by the Central Bank in February 2015 have clearly had an impact, stopping price increases, in particular on the Dublin market but basic issues of affordability are also likely to be having an impact, as incomes are not growing at a sufficient pace to justify the growth in prices seen during 2014.
Friends First say this is particularly true in Dublin. They claim the mortgage arrears situation is improving but remains a significant challenge for mortgage providers and mortgage holders.
Economist, Jim Power commented, "Given all of the unknowns, it is very difficult to be too prescriptive as to what to expect at this juncture. Uncertainty will be the byword for the foreseeable future. If the UK does decide to proceed with Article 50, it is not clear what sort of relationship will be negotiated with the EU, but it is clear that if the UK wants access to the EU market, which presumably it will, it would still be bound by many of the regulations and financial commitments that it is in theory trying to break free from. However, Ireland could benefit on the FDI front."
Source: www.businessworld.ie
