Dr. Adele Bergin:

I might add to what Dr. McQuinn has said. In this paper we focus on the main channels through which Brexit will impact on Ireland, such as through lower trade and a small positive from foreign direct investment, FDI. On some of the other factors, which the Deputy mentioned, such as exchange rates, we do factor in significant depreciation for sterling. In our disorderly scenario, sterling could be around 95p in the short run in 2019-2020, but that could involve sterling going to parity for a short period.

In the paper, we have looked at the generally accepted channels through which Brexit will impact on Ireland, and there is some consensus around that. The other thing we did that is quite important is we drew on a lot of other evidence, particularly, as Dr. McQuinn has mentioned, a lot of other microeconomic evidence to try to get a handle on whether it could be higher or lower, to make sure that we were using the best possible evidence, and we used that then to generate our scenarios. It is our considered view of the most likely impact of Brexit on Ireland. As both Dr. McQuinn and myself have pointed out, there is a lot of uncertainty around these estimates. We simply do not have prior good examples. There have been examples of countries breaking up, but there are no recent example of countries leaving such a deep and closely integrated bloc like the EU that we have been able to draw on. There is arguably even more uncertainty around the short run estimates. Again, because we just do not know, there is no consensus on whether any adjustment would be more sudden or gradual in the new relationship between the UK and the EU. One of the reasons, in addition to all of that uncertainty, some of the short-term forecasts are being revised downwards is because we seem to be in this wait-and-see period. Firms, potentially, are delaying investment decisions and so on because they are waiting to see what the outcome of this could be.