Published On: Wed, Aug 28th, 2019

Brexit panic: Varadkar warned no deal would have ‘severe impact’ on Ireland’s economy | World | News

In her annual pre-budget letter, acting governor Sharon Donnery, acting governor of the Central Bank of said that a number of sectors would be disproportionately affected by tariffs and delays, with no deal having an “immediate and severe impact”. Ms Donnery said that a prudent budgetary approach was critical to ensure the economy had sufficient resilience and policy had room to manoeuvre. She warned that a disorderly was one of the main risks to the Irish economy along with tensions in international trade and the global economic outlook.

The letter was published on the same day asked the Queen to suspend Parliament for more than a month.

The British Prime Minister will temporarily close down the Commons from the second week of September until October 14 when there will be a Queen’s Speech to open a new session of Parliament.

The Queen approved the order on Wednesday afternoon to prorogue Parliament no earlier than September 9 and no later than September 12, until October 14.

Ms Donnery said that if a disorderly could be avoided, the outlook for the economy was “positive”.

Assessing the potential impact of Brexit, she said: “A no deal Brexit would have an immediate and severe impact on almost all areas of economic activity.

“Certain sectors such as agriculture, food production and manufacturing have particularly strong links to the UK, both as an export market and as an important source of intermediate inputs into their supply chains.


“Any fiscal response to must be consistent with long run debt sustainability and does not undo the hard work in re-establishing Ireland’s fiscal credibility and risk the emergence of unsustainable debt dynamics.”

She noted the importance of reducing public debt in the current favourable financial market conditions, stating that fiscal windfalls, including those from corporation tax, could be ring-fenced to play a part in reducing the public debt burden.

She urged that the 2017 budget proposals to introduce an Irish specific debt target of 45 percent of GDP should be formalised by the government as soon as possible.

Pointing to the unpredictability of corporate tax revenues in recent years, she said: “Any strategy on corporation tax receipts should work in tandem with the medium-term expenditure framework to ensure that revenue windfalls are used to strengthen the resilience of the economy rather than finance permanent expenditure growth.

“Favourable market conditions and windfall tax revenue should be used to reduce public debt and build buffers for future downturns as opposed to financing current expenditure.”

On Tuesday, Irish finance minister  said the government had not decided whether to base October’s budget on a no deal Brexit scenario.

However, he added that the risk of the UK leaving the EU without a deal was growing.

Last week Dublin warned of “a very difficult time ahead” for its businesses and citizens if Britain leaves the European Union without an agreement.

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