Tue, 22 Sep 2020

Britain exiting the European Union is "damaging for Ireland", the country's new central bank chief said Wednesday in his first formal speech.

"Any form of Brexit will be damaging for Ireland," Gabriel Makhlouf said as British Prime Minister Boris Johnson looks to leave the EU by January 31 having recently secured a divorce deal with Brussels.

"Looking ahead... trade and ongoing geopolitical tensions as well as Brexit pose risks to growth," said Makhlouf, who took up his new position in September.

Irish Prime Minister Leo Varadkar has said that Johnson's Brexit deal would benefit both eurozone-member Ireland and neighbouring Northern Ireland.

The UK province's border with Ireland had been a major complication in Britain striking its Brexit deal.

Speaking Wednesday in Waterford, southeast Ireland, Makhlouf said "the small and open nature of the Irish economy means that it is always particularly vulnerable to shocks stemming from abroad.

"External risks are heightened at the moment, both due to structural developments - including the ongoing possibility of a disorderly Brexit and the risk of an escalation of trade wars - as well as cyclical developments, such as a sudden change in global financial conditions," he added.

The central bank chief said reducing Irish public debt would help to "withstand negative shocks".

As for Brexit alone, it "represents an enormous change - and transition - for the citizens of Ireland, for many Irish firms and for the economy as a whole", he said.

"Brexit will inevitably bring disruption - even with a 'deal' - which, by its very nature, will dissipate over time.

"But we must not lose sight of the inevitable long-term costs," Makhlouf stressed.

In September, Ireland's central bank warned one in three farms would be at risk in a no-deal, which could see trade barriers erected and stiff tariffs imposed on meat.

Meanwhile, Brexit itself remains at risk, depending on the outcome of Britain's general election on December 12.

Last month, Ireland's finance minister Paschal Donohoe unveiled a 2020 "no-deal" Brexit budget that includes a 1.2-billion-euro ($1.3 billion) relief fund.

Ireland is projected to run a surplus of 0.2 percent of gross domestic product this year.

Under no-deal projections, that would slip to a deficit of 0.6% of GDP in 2020.

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