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Any form of Brexit will be damaging for Ireland, the Governor of the Central Bank has said.<\/p>\nAny form of Brexit will be damaging for Ireland, the Governor of the Central Bank has said.<\/p>\n
Gabriel Makhlouf said Brexit represents an enormous change and transition for society, businesses and the economy as a whole.<\/p>\n
In his first keynote speech since being appointed Governor of the Central Bank of Ireland, Mr Makhlouf said Ireland has a small open economy that leaves it vulnerable to external risks such as Brexit.<\/p>\n
\u201cOur work on Brexit has spanned across our mandates, and we have published extensive analysis of, and advice on, the risks and the steps required to mitigate them. Ensuring that people, households, firms and the country adapt, adjust, and manage this change is a constant process.\u201d<\/p>\n
Mr Makhlouf was addressing students at Waterford Institute of Technology on Wednesday morning.<\/p>\n
\u201cBrexit will inevitably bring disruption \u2013 even with a \u2018deal\u2019 \u2013 which, by its very nature, will dissipate over time. But we must not lose sight of the inevitable long-term costs. Any form of Brexit will be damaging for Ireland.\u201d<\/p>\n
He said the Central Bank has been preparing for Britain\u2019s exit from the EU for some time but the Withdrawal Agreement is stage one of a longer process.<\/p>\n
While the UK is set to leave the EU at the end of January, British Prime Minister Boris Johnson has yet to get the Withdrawal Agreement ratified by Parliament.<\/p>\n
Mr Johnson is hoping to secure a majority in December\u2019s General Election in order to enable him to achieve that.<\/p>\n
\u201cOur work will continue over the coming weeks, months, and indeed years as we all transition to the new arrangements, whatever they may be. The fact is that the process is far from over \u2013 simply having a Withdrawal Agreement is not the end of the road but only the end of the beginning,\u201d he said.<\/p>\n
Mr Mahklouf said analysis from Central Bank economists shows that a disorderly Brexit or a permanent loss of corporation tax revenue could result in the level of debt remaining above 90% of national income \u201cwell into the middle of the next decade\u201d.<\/p>\n
He said it was crucial the level of public debt be reduced so that public finances can withstand the negative shocks Brexit could potentially bring.<\/p>\n
He said economic resilience is needed for the country to meet the economic challenges ahead.<\/p>\n
\u201cBuilding economic resilience is not like building a bulwark and then assuming the job is done. There is no one-off solution to the challenge of building resilience. It is a continuous process, involving individuals, households, businesses, institutions and authorities, such as the Central Bank, both at home and abroad.<\/p>\n
\u201cIrrespective of the particular \u2018shift\u2019 or \u2018shock\u2019, rapid change in the world around us and our openness and international interconnectedness mean we need to build resilience.\u201d<\/p>\n
He said that while the Ireland\u2019s economy has benefited greatly from its openness, the economic crisis and recession \u201cshowed just how vulnerable we are to shifts in global economic and financial conditions, in particular when large domestic imbalances are allowed to build up.”<\/p>\n