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The consumer cost of a no-deal Brexit: Grocery prices at risk of rising

A no-deal scenario would also cost Ireland 73,000 jobs over the next two years, according to analysts’ predictions.

THE CENTRAL BANK has warned that a no-deal Brexit could lead to increased grocery costs for consumers but said that several factors could help retailers keep prices down.

The price warning and the effects of a hard Brexit on the economy have been brought into sharp focus by the Central Bank in its latest quarterly bulletin.

The Central Bank’s report looked at the potential impact of a no-deal Brexit on the price of groceries, noting that “increased tariffs and trade costs may be passed on to consumers”.

On the cost of trade, the research points to “additional shipping costs to Ireland” if goods are required to comes from further afield than the UK.

It adds that the sectors most exposed are bread and cereals.

Despite this, analysts within the Central Bank have said that there are several factors that may guard against consumers actually having to pay higher costs for their groceries.

Among those factors are an overall profitability within the Irish retail sector which means that supermarkets may have enough room within their margins to keep costs down.

“One implication of that, for example, is there’s maybe a little bit more scope, either for retailers to absorb some of the higher transport and trade costs, but also maybe more inclination for UK retailers to stay in this market, because of higher profitability, in the event that their trade costs become more expensive,” explained the Central Bank’s director of economics and statistics Mark Cassidy.

There are also offsetting factors: for example, you would expect to see an exchange rate depreciation that will put downward pressure on food imports. Second, we’re talking about imports of certain brands and products. So there’s also the potential for Irish consumers to switch to substitute brands or similar brands.

Jobs

On the wider economy, the report says that a no-deal Brexit could cost Ireland an estimated 73,000 jobs by the end of 2021 and increase unemployment from its current rate of 5.3% to 6.9% over that period.

The figure of 73,000 takes account of both job losses and the cost of jobs not created that might otherwise enter the economy if an orderly Brexit takes place.

These lost jobs would be in the sectors most vulnerable to the effects of Brexit such as agriculture and tourism.

However, the Central Bank is predicting that if a deal is secured, the country could ride out the effects of Brexit to actually decrease unemployment over that period to 4.8% in 2020 and 2021.

The nature of Brexit would also have a significant effect on the potential for GDP growth, with the Central Bank saying a figure of 4.3% could be achieved next year if there’s a deal. That figure plunges to 0.8% in a no-deal scenario.

The two predictions mean it is the first time the Central Bank has published two forecasts for the Irish economy, with Cassidy saying Brexit makes the current situation “extraordinary and unprecedented”.

The 84-page report says that a no-deal Brexit would represent “significant disruption and the negative shock” to the Irish economy but also points out that no-deal job losses would be much worse outside of Dublin.

Cassidy says that agriculture employs one in 14 people across the economy as a whole compared to one in 33 people in Dublin. In some areas, such as in Cavan/Monaghan, that figure is as high as one in five.

“Rural areas in particular are most affected, tourism of course is spread across many rural areas. In terms of agricultural and food, several different statistics are important, the first is employment in agriculture and food, which is highest in the border regions and then in midlands and in midwest.”

On Dublin, he adds that several factors could help shield the city from the worst effects of Brexit job losses:

You’re certainly not ruling out any job losses or fewer jobs being conconcentated, we do have SMEs, and tourism may be affected in Dublin, but it is certainly less exposed

“You will also see some positive impact, but I would not overstate this, from new financial sector firms relocating to Dublin in the coming years. So the impact is expected to be lessened.”

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    Mute Humphrey Harold Haddington
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    May 1st 2019, 2:14 PM

    Seems the only people we can trust in this country anymore to hold important jobs are foreigners. We should also hire one for the je HSE top job…..

    141
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    Mute John Flood
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    May 1st 2019, 2:17 PM

    @Humphrey Harold Haddington: I wouldn’t call it trust, but rather no Irish baggage, political or otherwise.

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    Mute CBOjNUsc
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    May 1st 2019, 5:08 PM

    @Humphrey Harold Haddington: I would say this is more of a smoke screen. Strange there wasn’t one person in this entire country capable of the job. Or do some here think we Irish are just completely dishonest and untrustworthy.?

    17
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    Mute Ciaran O'Mara
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    May 1st 2019, 2:22 PM

    Joe Schmidt worked out pretty well.
    Nothing wrong with another Kiwi running things here!

    140
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    Mute Marianne
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    May 1st 2019, 2:57 PM

    The only way to restoring trust is to employ an outsider ..perhaps we could get a few TD’S from abroad ALSO

    52
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    Mute John Declan
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    May 1st 2019, 3:00 PM

    Could we get a couple of hundred to run for Dail Eireann!!

    25
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    Mute Shane Murphy
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    May 1st 2019, 3:03 PM

    Delighted to see its gone to a foreigner and not one of the lads mates! The fact it went to a Kiki is even better, recently when some bottom feeders went on a crime and anti social behaviour spree over there, the Mayor of Auckland called them The Mayor of described them as “a**holes” and “trash” Imagine what they would be called here, victims, “failed by society” etc, Joe Duffy and Miriam O’Callaghan would be fighting over who could interview them first, so they could regale us tax paying morons, with tales of the the awfully harsh (LOL) worldclass Irish welfare state here. Irish politicians make me sick, nobody responsible for everything, everyone is a victim etc! Pathetic! https://www.mirror.co.uk/news/world-news/ahole-brit-tourists-kicked-out-13857689

    54
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    Mute Bruce van der Gutschmitzer
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    May 1st 2019, 3:10 PM

    @Shane Murphy: I was going to say I’m surprised that you’re happy it’s going to a foreigner given your right wing views elsewhere but then quickly realised that you’re using this article as an excuse to rant about other stuff that gets underneath your pr1ckly skin.

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    Mute Leadóg
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    May 1st 2019, 3:13 PM

    @Bruce van der Gutschmitzer: That other stuff gets under a lot of people’s skin.

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    Mute Bruce van der Gutschmitzer
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    May 1st 2019, 3:20 PM

    @Leadóg: indeed it does but the lad’s entire focus is irrelevant to the topic. Just that it happened in nz. Lord of the rings was filmed there but I’m not gona go waffling on about it as its irrelevant.

    9
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    Mute Shane Murphy
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    May 1st 2019, 3:26 PM

    @Bruce van der Gutschmitzer: are you aware of what bertie and co’s mate ,sorry regulator was responsible for during the boom ? New Zealand is far enough away , that even sleveemism probably hadn’t reached there. Hopefully varadkar does us all a favor and takes a long hike and casts himself into the fires of mount doom!

    17
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    Mute Bruce van der Gutschmitzer
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    May 1st 2019, 3:33 PM

    @Shane Murphy: you’re going off on a tangent again but yes, I’m well aware. Patrick Nevin sat on his hole and did sweet fa and then rode off into the sunset while we pay his pension.

    18
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    Mute Shane Murphy
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    May 1st 2019, 3:44 PM

    @Bruce van der Gutschmitzer: we agree on this !

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    Mute Josh Hanners
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    May 1st 2019, 5:07 PM

    @Bruce van der Gutschmitzer: Is there no end to your homophilic bile?

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    Mute Bruce van der Gutschmitzer
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    May 1st 2019, 6:26 PM

    @Josh Hanners: I actually had to go and Google homophilic. Turns out it’s a dated term for homosexual but lost its relevance after the 60s civil rights movements. You stuck in dark ages too buddy?

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    Mute Josh Hanners
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    May 1st 2019, 4:59 PM

    Sad day when we have to look to foreign countries to find an honest man!

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    Mute Mushy Peas
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    May 1st 2019, 6:11 PM

    @Josh Hanners: the sad day was years ago when we realized our lot couldn’t organize mass in the Vatican

    10
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    Mute Mushy Peas
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    May 1st 2019, 6:11 PM

    @Mushy Peas: let alone an economy and state

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    Mute Bruce van der Gutschmitzer
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    May 1st 2019, 6:31 PM

    @Josh Hanners: we need fine, honest, God fearing folk like yourself to run things Josh, mo chara.

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    Mute Pete Lee
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    May 1st 2019, 4:57 PM

    Im delighted…
    That none of civil service (RWatt etc) and Sharon….as they refused to answer questions posed by our elected officials..
    Im not a FG head but well done Paschal.
    If he shelves banker pay report ill vote FG

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    Mute TamuMassif2019
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    May 1st 2019, 11:06 PM

    When debt is seen as a commodity then people will rise up but it will take a disaster to make that happen. Those in the financial trade learn nothing about consequences, only about going after short term profits at any cost. That is why crashes will keep on happening as well as how the ECB treats Central banks in Europe because the EURO isn’t their currency but is the ECB’s currency instead, no one has coped onto that yet?

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