Tuesday 25 October 2016

Colm Kelpie: As FF and FG dither, economic uncertainty and risk increases

Published 13/04/2016 | 02:30

Micheál Martin. Photo: Mark Condren
Micheál Martin. Photo: Mark Condren

Fine Gael and Fianna Fáil dither, six weeks after the election, about the formation of a new Government, while potentially one of the biggest economic risks facing the country is just around the corner. Having been barely mentioned in the election campaign, you'd hardly know it was of importance to us at all.

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The warning issued yesterday by the IMF about the potential consequences of a British withdrawal from the European Union is the starkest yet from the Washington-based lender.

The Fund's chief economist, Maurice Obstfeld, says there could be "severe regional and global damage" if Britain votes to pull out of the EU.

An exit would present "major challenges" and a prolonged period of uncertainty, which it says could dent confidence and have a negative effect on investment. The warnings have been plentiful.

And Ireland is front and centre in terms of the fallout should the vote be to pull out.

Experts believe Ireland could be among the countries in Europe worst-hit should an exit occur, given the close economic, political and societal links between the two countries.

The ESRI has predicted trade could slump by up to a fifth; business lobby group IBEC believes the value of sterling will be forced sharply down, which would be a huge negative for Irish firms selling into the UK market.

Theresa Villiers, the Northern Ireland Secretary and one of the key 'leave' advocates, has argued that there is no reason to believe that the common travel area between the two countries would end simply because of an EU withdrawal, insisting that it predates EU membership.

But one of her predecessors, Peter Mandelson, who's backing the remain campaign, believes otherwise.

Last month he said border controls could be imposed.

With the campaign ramping up ahead of the June 23 vote, expect claims and counterclaims. Nobody knows for certain what might happen. And it could be argued that even if Ireland had a stable and functioning government, it could do little about the outcome of a referendum in another sovereign territory, or the uncertainty that it is creating.

But without a government in place, we're heaping uncertainty on top of even more uncertainty.

Irish Independent

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