Ireland warned to brace for ‘double whammy’ of no deal Brexit and coronavirus cash crisis

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Gabriel Makhlouf said Ireland would be the eurozone’s biggest loser if Britain leaves the EU without a trade agreement on December 31, with the lucrative food and agriculture sectors facing the hardest hits. The UK accounts for 38 percent for agricultural and food products exported from Ireland and the figure is even higher for beef. Dublin fears a no deal Brexit could put between £1.22bn and £1.36bn of tariffs on exports to the UK.

This whole process is lose-lose

Gabriel Makhlouf

Mr Makhlouf, governor of the Irish central bank said tariffs on goods exported to the UK would slice 2 percent of next year’s economic growth predictions.

He told the FT: “This whole process is lose-lose.

“People talk about who will be the winners from this, but I would argue that in the short term there will be no winners.”

Mr Makhlouf said he would expect London’s dominant position in Europe’s financial services sector to eventually drift out to Dublin, Frankfurt, Paris or Amsterdam once the dust settled on Brexit.

He said: “I think all of us would rather it carry on being London, but there is going to be change.

“I have found it fascinating how little debate there has been in the UK about the fact that this deal that is being negotiated doesn’t include financial services, which is such an important part of the UK economy, that employs lots of people and pays lots of taxes.”

The Irish central bank has recently changed its economic forecasts in readiness for a no deal Brexit following hot on the heels of the coronavirus crisis.

Mr Makhlouf said: “There is a whammy from the pandemic that is hitting particular sectors hard and then we have the added whammy of Brexit and, if there is no deal, that’s a particularly big whammy.”

Ireland went into its second nationwide lockdown this week in a bid to halt the spread of COVID-19.

The whole country moved to the highest level of restrictions under Dublin’s five-tiered framework for living with the virus at midnight last night.

In doing so it became the first country in Europe to re-impose a nationwide lockdown in an effort to tackle the record number of cases over recent weeks. The strict measures will remain in place until December 1.

Under the new restrictions, large parts of the Irish economy have shut down with all non-essential retailers ordered to close and restaurants, cafes and bars are allowed to provide takeaway or delivery services only.

Hairdressers, barbers, salons, and gyms are not allowed to operate.

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Mr Makhlouf said the tighter restrictions would cause the Irish economy to contract again in the final three months of this year.

He said: “There is a reasonable assumption that the six-week lockdown happens fairly regularly.

“We’ll have to revise our models. The fourth quarter is going to be negative.”

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