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Irish economy ‘resilient enough’ to withstand bumps of hard Brexit

Edmund Heaphy
Ireland Correspondent
Dublin’s main financial district. Photo: Reuters

Ireland’s economy is “resilient enough” to withstand the bumps of a hard Brexit, the country’s central bank said on Thursday.

Though it warned that any type of Brexit would have a negative effect on the Irish economy, the bank said that the “cliff-edge risks” associated with the UK’s departure from the EU were now “manageable”.

“The Irish banking system is considerably more resilient than it was,” said Ed Sibley, the deputy governor of the Irish central bank.

“And the most significant firms operating in Ireland across all sectors have, in line with our requirements, prepared and are executing contingency plans for a hard Brexit.”

READ MORE: Irish business groups warn against ‘devastating’ consequences of no-deal Brexit

The bank has long noted that Brexit is the main risk that the Irish economy faces, and warned in October that the country could be affected by financial speculation and sterling currency swings as the likelihood of a no-deal Brexit increases.

One of Ireland’s leading thinktanks said last month that a no-deal Brexit could almost halve Irish economic growth in 2019.

But Sibley said that, from a financial stability perspective, he was “satisfied” with the economy’s preparedness for Brexit.

READ MORE: Irish Central Bank processing over 100 Brexit-related applications

He also announced that some insurance firms based in the UK and Gibraltar will be able to continue providing their existing insurance contracts in Ireland, even in the event of a no-deal Brexit.

The bank, he said, has worked with the Irish finance ministry to legislate for a “temporary run-off regime.”

Despite that, Sibley warned that there would still be impacts for consumers, and said that the supply of niche insurance products by UK-based firms “may reduce or end altogether,” considering the increased costs that would be involved in serving EU-based customers.

He noted that many firms were in the process of setting up bases within the European Union.

The bank has previously said that it was processing more than 100 Brexit-related applications from financial services firms.

It signalled that its main focus in reviewing these applications was on “financial stability”, rather than on the “relative attractiveness of Ireland” compared to other EU countries.