It is “crystal clear” that regional Ireland must brace itself for “permanent disruption” whatever the outcome of Brexit, the governor of the Central Bank has warned. Philip Lane said the days and weeks following a no-deal Brexit would see a lot of disruption, and the question is how long it would take to adapt to it. Smaller firms and the regions will be more adversely affected than multinationals, he told the Oireachtas finance committee.
“We have a large multinational sector here which essentially has a global market,” said Mr Lane. “Those firms would not be particularly exposed to Brexit risk. So many small firms’ only export market is the UK, and within agrifood and certain segments within that, the dominant export market is within the UK. There is no doubt these risks are quite concentrated, and given these industries are regionally concentrated, there will be very different effects across the country.”
He was responding to Fianna Fáil finance spokesman Michael McGrath, who said any Brexit scenario is stark for the regions. Earlier this week, the ESRI and the Department of Finance predicted that, over 10 years, the economy would expand no matter what form Brexit took, but said GDP would grow at a slower pace than would otherwise be the case if Britain had voted to stay in the EU.
“If you drill down into the detail, the impact on certain sectors like agriculture, agri-food, indigenous manufacturing, and the regions would actually be much more acute than the overall numbers published by the ESRI and Department of Finance,” Mr McGrath said. That is “crystal clear”, Mr Lane replied.
Sterling jumped on hopes that hardline Brexiteer Jacob Rees-Mogg would, after all, throw his weight behind Theresa May’s Brexit withdrawal deal. The leader of the European Research Group, which with the DUP has long rallied opposition to Mrs May’s border backstop deal, hinted at a new tack. The pound gained around 0.3% to trade at 85.39p. A stronger pound favours Irish firms selling into Britain.
However, Mr Lane said: “There will be a big market response because everyone who looks at the market is expecting a deal to pass, or they are overly optimistic about what a no-deal will mean. We would have to be very alert to those short-term effects while recognising that Brexit is essentially a permanent disruption.
“It is a permanent disruption in relation to the challenges facing industries, facing individual firms and the regions. The Government will have to think about all these factors — how will the regions adapt to this situation.”