Sign in. It’s quick, free and it’s up to you.
An account is an optional way to support the work we do. Find out more.
THE GOVERNMENT SHOULD consider drawing up a supplementary Budget in the New Year to help cope with the effects if there’s a no-deal Brexit, the Economic and Social Research Institute (ESRI) has said.
Minister for Finance Paschal Donohoe has already indicated the Budget will reflect a scenario where there is a hard Brexit. However, this warning from the ESRI indicates that a further revision of this Budget may be needed due to the damaging effects of a no-deal.
In its quarterly economic commentary, the ESRI said that “it is not inconceivable that the Irish economy could contract in 2020″ in the event of a no-deal Brexit next month.
For Ireland to go back into recession, its GDP would have to shrink for at least two quarters in succession. At the present moment, however, the economy is performing strongly.
The ESRI said in its commentary that the headline GDP rate forecast for this year is now 4.9%. In an estimate based on Brexit being kicked down the road again into the coming year, the ESRI said the economy is expected to grow by a further 3.1%.
It does warn that these figures could be skewed somewhat, with what it calls “certain internal transactions” of a few multi-national firms causing a divergence between the headline growth and the underlying output in the economy over the next year.
As well as Brexit, another risk that the ESRI highlighted is “growing evidence of a slowdown amongst some of Ireland’s most important trading partners”.
Coupled with the potential for a no-deal Brexit, it said: “These concerns make the choice of the appropriate policy mix for Budget 2020 particularly complex.
It may be the case that a supplementary Budget is required early in the New Year if external conditions change substantially.
The ESRI also advises against relaxing Central Bank rules when it comes to mortgage lending.
It warns that it could create another “house price-mortgage credit spiral” if lending was made more readily available, driving house prices up and increasing debt.
The ESRI added that its forecast on housing completions for this year has fallen from 23,500 to 21,000.
To embed this post, copy the code below on your site
Erm…. Weren’t the banks supposed to do this as part of their bailout conditions?
Yes, indeed they were! But why would the banks fulfill these conditions in our culture of non-accountability? Tacit admission of failure on Mr Bruton’s part.
We will see how it goes . My fear would be that to qualify for this credit you would need to prove first that you don’t need it …
Which in a way is what prudent banking is all about. To quote Mark Twain “a banker is the type of fellow who lends you his umbrella and then asks for it back when it starts raining”.
It’s a good start Mr Bruton, the country needs more of this, get you finger out.
It all sounds great in theory, however he states that 58 of 67 measures to create jobs have been implemented. That being the case, then the fact that unemployment levels are still as high as ever, plainly shows that those measures haven’t made one bit if differences.
Maybe some firms have been kept open by the measures. It would be great to see some net job growth. Maybe we should be closing the deficit gap more slowly.
In all fairness it would take years for even the best measures to have effect on employment, even in a favourable global economy.
One thing that I want to see is SME’s being the focus of the Govt. They provide 90% of private jobs, they are the backbone of this economy. Not Multi’s, which are important but not the engine of our economy.
SME’s might not have flash job launches or attend dinners and golf occasions but our future success or failure rests solely with them.
Finally , this has been announced before , there were stories and press releases last April , then again in July , the IMF actually thought we already had introduced this , so surprise surprise guess who’s in town this week and hey presto , finally it’s announced , hate to sound cynical but we are constantly told ” the banks are lending” when all the evidence from SME sector is the contrary , hopefully this will be actually done as opposed to announced , and the badly needed money can be used fund small business as promised .
useless. Banks are supposed to do this.
4th attempt placing this comment. Censorship here getting over bearing.
Yeah great idea. I mean the Irish state has such a stellar reputation in its recent past playing at being a banker. What could possibly go wrong?
*sits back and waits for next scandal about a FG donor qualifying for umpteen loans*
have your say