Saturday 24 March 2018

Absence of Brexit debate in election baffling - DKM

DKM chair Brendan Dowling. Photo: Colm Mahady/Fennells
DKM chair Brendan Dowling. Photo: Colm Mahady/Fennells
Colm Kelpie

Colm Kelpie

Economic historians will reflect on Election 2016 and wonder how the imminent prospect of a British withdrawal from the European Union was barely raised as an issue in the campaign, economic consultancy DKM has warned.

With the pound trading yesterday at a 14-year-low against the euro and hovering around a seven-year low against the dollar, DKM chair Brendan Dowling said the Brexit debate will undoubtedly lead to a slowdown in UK growth, even if Britons vote to remain in the EU.

"These factors will differentially affect Ireland given the nature and scale of its links to the UK," Mr Dowling, inset, said.

"At the moment it would appear that none of these factors are in the forecasts for the Irish economy."

Mr Dowling also warned that Irish voters seemed to place a "low value" on stable government and a high value on electing a large number of independents whose "sole common features is their low likelihood of forming a functioning government".

He pointed to political deadlock in both Belgium and Spain, but warned neither had to deal with the possibility of the UK leaving the EU.

"When economic historians reflect on February 2016 half a century from now, they will wonder how Brexit was scarcely raised as an issue in an election which was supposedly about the management of the economy," he said.

"They may also wonder how so many of those seeking re-election were more concerned with redistributing the current levels of income than ensuring the continued growth of that income.

"The implicit assumption seems to have been that the economic pie would continue to grow, regardless of the election outcome, and the only issue was the appropriate division of this pie."

In its latest snapshot of economic forecasts, which give a concise outlook for the economy based on 13 sources including the Central Bank, Department of Finance, and Economic and Social Research Institute (ESRI), GDP will grow by 4.7pc this year, the fastest in the EU, and there will be continued strong growth in domestic demand.

But risks include the uncertainty about the formation of the next government, and international investigations into the tax affairs of Google and Apple and the knock-on effects for Ireland.

Meanwhile, UK Foreign Secretary Philip Hammond said the weakness in sterling is a "foretaste" of what's the come if the UK pulls out of the EU.

"A vote to leave is a vote for an uncertain future, that's a simple fact, and that uncertainty would generate immediate and negative reactions in financial markets," he said.

Irish Independent

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