Financial system can withstand a hard Brexit – Central Bank

The Central Bank has been able to provide assurances that the financial system as a whole was resilient enough to withstand a hard Brexit and that the most material ‘cliff-edge’ financial stability risks arising from Brexit “have been largely mitigated”.

Finance Minister Paschal Donohoe said he has met with top officials from the National Treasury Management Agency (NTMA), which manages the country’s debt, the Central Bank and the Revenue Commissioners to assess readiness.

“All are engaging closely in the overall whole-of-Government preparations, and are confident they have put appropriate contingency measures in place to do everything possible to limit the inevitable disruption to consumers and trade, in the event of a no-deal Brexit,” Mr Donohoe said. The minister again stressed the “backstop” is not for negotiation and there is “no such thing” as a managed “no deal”.

Even in a cliff-edge Brexit, the Irish economy is likely to keep growing, albeit at a much slower pace.

“The initial assessment by my department suggests the level of economic activity will be around 4.15 percentage points lower than our existing trajectory over the medium-term and will be around six percentage points lower compared to a no-Brexit scenario,” the minister said.

A slowdown of such magnitude would cause the headline deficit to widen by as much as a percentage point of gross domestic product.

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