Ireland faces economic oblivion: Bank chief admits hard Brexit will DEVASTATE country
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Gabriel Makhlouf insisted Dublin would be the Eurozone’s biggest loser if the UK and EU fail to broker a Brexit trade deal before the end of the year. But he claimed the economic misery of lockdowns to curb the spread of the pandemic will only double the pain. The banker said new tariffs on goods would devastate Ireland’s agriculture and food sectors, knocking two percentage points from the country’s economic growth in 2021.
“This whole process is lose-lose,” Mr Makhlouf told the FT.
“People talk about who will be the winners from this, but I would argue that in the short term there will be no winners.”
Shortly after Michel Barnier’s concession convinced Downing Street to resume Brexit talks, Mr Makhlouf conceded the Irish central bank had recently based its future forecasts on a no-deal scenario.
“There is a whammy from the pandemic that is hitting particular sectors hard and then we have the added whammy of Brexit, and if there is no deal, that’s a particular big whammy,” he said.
The UK accounts for around 10 percent of Irish exports, but that increases to 38 percent for agriculture and food sectors.
Dublin has estimated a no-deal Brexit could see between €1.35 billion and €1.5 billion of tariffs slapped on exports to the UK.
And Mr Makhlouf believes a no deal would have wider costs for Irish society.
The European Central Bank has published a paper with a number of assessments on the potential impacts of a no-deal Brexit.
It concluded the UK would be whiter harder than the Eurozone, which was likely to suffer a slump of 0.4 to 1.5 percentage points in GDP.
Ireland would be the hardest hit of the bloc’s members because of its connections with UK markets.
The ECB said EU exports of cars to the UK were expected to be hit with tariffs worth €5.3 billion – a huge chunk of the estimated €16.1 billion of total tariffs on EU exports under no deal.
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Despite his gloomy outlook, Mr Makhlouf claimed London would slowly lose its position as the Continent’s leading financial services hub to the likes of Dublin, Frankfurt, Paris and Amsterdam.
He said: “I think all of us would rather it carry on being London but there is going to be change.
“I have found it fascinating how little debate there has been in the UK about the fact that this deal that is being negotiated doesn’t include financial services, which is such an important part of the UK economy, that employs lots of people and pays lots of taxes.”
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Brexit talks resume in London after Mr Barnier, the EU’s chief negotiator, agreed any trade deal should respect Britain’s sovereignty.
After talks with Lord Frost, the Prime Minister’s Brexit envoy, the pair agreed to hold intensive talks over the weekend in the hope of making an all-important breakthrough.
And they are expected to hold further talks in Brussels next week in the hope of brokering an agreement by mid-November.
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