Saturday 14 December 2019

Firms must stay alert to threat of hard Brexit, Ulster Bank economist warns

Conference: John Goodwin of Littlewoods Ireland Katie Daughen, head of Brexit policy at British Irish Chamber of Commerce, and Jonathan McMillan, manager of Brexit Unit, Enterprise Ireland. Photo: Orla Murray
Conference: John Goodwin of Littlewoods Ireland Katie Daughen, head of Brexit policy at British Irish Chamber of Commerce, and Jonathan McMillan, manager of Brexit Unit, Enterprise Ireland. Photo: Orla Murray
Ellie Donnelly

Ellie Donnelly

Businesses should continue to plan for a hard Brexit, according to Ulster Bank chief economist Simon Barry.

As the UK prepares to go to the polls in a general election on December 12, Mr Barry said Conservative Party leader Boris Johnson was targeting a relationship between Britain and the European Union that was not closely aligned.

"This is really important; if the UK wants to do its own thing, you are ruling out all the options for a close natural relationship," he said.

"More political independence is what the UK wants, and if it achieves more, it's bad [for Ireland]," he told guests at a Business Beyond Brexit event organised by the British Irish Chamber of Commerce.

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He said the EU and UK were potentially heading in the direction of a "bare bones" free trade agreement.

"It would be wrong to presume we can take our foot off the gas in terms of preparation work," he said.

In an overview of the Irish economy, Mr Barry said forecasts of a slowdown here in the event of a hard Brexit would amount to "a huge shock", even if the country does not fall back into recession.

Elsewhere, he said the country had almost become "desensitised" to "an impressive and remarkable transformation" of the labour market here over the past seven years.

"It's not just a Dublin story, all regions have benefited," Mr Barry said, adding that the labour market had a driving influence on other aspects of the economy.

Hesaid: "Workers are getting paid more and household spending power is rising at about 6.5pc per year."

However, he warned against setting expectations for the jobs market to remain as strong as it currently is.

"There will be slower but more sustainable jobs growth," Mr Barry said.

Meanwhile, global uncertainty and Brexit have potentially played a useful role in stemming the risk of the Irish economy from overheating, Mr Barry said.

He said that the "really unhelpful conduct of economic policy by the United States administration" meant international markets had become more uncertain. Uncertainty, he said, was the "enemy of growth".

There was now less faith in the operation of the global trading system, Mr Barry added.

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