Oireachtas Joint and Select Committees
Wednesday, 27 February 2019
Committee on Budgetary Oversight
Macroeconomic Analysis and Fiscal Risks: Central Bank of Ireland
Dr. Thomas Conefrey:
It may seem like we split hairs when we state it is a scenario rather than a forecast but methodologically there is quite a difference between the two. In the case of a forecast exercise, such as the central forecast in our bulletin, we make assumptions on all of the factors we believe would impact on the evolution of the Irish economy in 2019 and 2020. A scenario is a much more limited exercise. In the case of the Brexit work, we vary only the nature of the UK's relationship with the EU. In this particular exercise, on a no-deal Brexit, we looked at the evolution of the economy if the UK's relationship reverts to a WTO-type relationship and all other factors we believe will affect the path of the Irish economy over the coming ten years were held unchanged. If we were doing a forecasting exercise, we would think about all of the various aspects that would impact on the growth in the economy over ten years, such as other changes in the external environment and all of the other ingredients that go into a forecasting exercise. In this particular no-deal scenario analysis we are only varying this single part, which is the nature of the UK's relationship with the EU. It is a more limited exercise in this sense.