THE Irish economy will suffer no serious damage from the tighter rules on bank capital, a new analysis has found.
The study from the Bruegel policy thinktank in Brussels sees a 0.8pc loss of economic output (GDP) in the Irish economy, arising from the fact that banks will be able to lend less if they have to hold more capital.
The losses vary from one country to another, depending on the extent to which firms rely on bank lending for funds, and how many firms are likely to be seeking extra credit from banks.
The report sees Italy taking the biggest hit, with a 1.24pc loss in GDP. Under the so-called "Basel III" proposals, banks will have to have a minimum of pure investment capital equal to 6pc of their assets, and be able to turn more of their assets into cash within a month.
Ireland ranks 13th among the EU-27 for the hit to its economy from the new rules; behind the UK's 1pc of GDP loss and just ahead of Germany.
However, the profitability of Irish banks is seen as poor, at just 0.55pc of assets. Only French and Danish banks have a worse outlook, the report says.