No-deal Brexit will cause ‘big short-term’ shock to Ireland

A no-deal Brexit will deliver a"big short-term shock" to the Irish economy, the head of the International Trade Centre has predicted.

On a visit to Dublin, Arancha González said: "There is going to be a very big short-term shock and that will have to do with the fact that you do not easily disconnect a trade regime from one day to the next. So there will be a short-term shock ... also very big for Ireland. This short-term shock is coming at a time when the global economy is on a downward trajectory."

Ms González said difficulties would be particularly acute for exporters who used the UK as a "land bridge" for transporting their goods to continental Europe.

The International Trade Centre is a joint agency of the United Nations Conference on Trade and Development and the World Trade Organisation. Ms González was in Dublin to meet with Government officials to discuss Ireland's membership of the agency. Ireland provides about $1 million (€910,000) annually in funding to it. "That is very important to the core funding of our organisation," she said.

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FDI decrease

Ms González noted there was also a decrease in foreign direct investment globally, along with business sentiment generally. She said it wasn’t clear that central banks around the world would have the “same firepower” to tackle another recession as happened after the financial crash in 2008.

Ms González said the US-China trade war was another negative for global trade, adding that this battle had a “geopolitical dimension” around who controlled the technology space, not just trade.

She said she did not believe that the era of globalisation was coming to an end, but said change to the way multinational companies providing digital services were taxed would happen at international level. She said this would be best achieved in a “co-operative manner” at OECD level, which is working on a framework to deal with digital taxation issues globally. “Taxation is a zero-sum game unless it’s done in a co-operative manner,” she said.