Irish backstop –
Official Irish Government and Central Bank forecasts of economic slowdown under a disorderly Brexit would still amount to “a huge shock”, even if an outright recession is avoided, a British Irish Chamber of Commerce seminar in Dublin was told on Wednesday.
Ulster Bank chief economist Simon Barry said that any focus on the fact that official forecasts still point to gross domestic product (GDP) movement remaining in positive territory “is completely missing the point” as the growth path is “blown off course”.
“It’s still a huge shock compared to the growth rate we were expecting,” he said.
In framing Budget 2020 under a no-deal scenario, the Department of Finance forecast last month that GDP growth would slow from 5.5 per cent in 2019 to 0.7 per cent next year.
Still, a Reuters poll of economists published on Wednesday suggested that the probability of a no-deal Brexit has dropped to 20 per cent from 30 per cent in October as UK prime minister Boris Johnson looks set to win a general election next month and secure parliamentary backing for his withdrawal deal.
However, Katie Daughen, head of Brexit policy at British Irish Chamber of Commerce, noted that the passing of a withdrawal accord is only the first step in the process and that there are a “number of cliff edges” facing businesses relating to a transition phase and negotiations surrounding a free trade agreement (FTA).
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Mr Johnson has set his sights on an FTA being completed by the end of 2020 and has ruled out extending a planned transition period beyond that date. Ms Daughen said that most analysts estimate that it would take between five and 10 years to draw up a comprehensive FTA and that anything concluded by the end of next year would “most likely be a bare bones one”.
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