Dr. Kieran McQuinn:

That is always the case with financial markets. They are very attentive to that type of issue, and in fact build in risk in anticipation of events. In terms of the impacts on the real economy, I refer again to the points I made about things such as the consumer sentiment index and a related index on investment, the savings and investment index. Both of those indices, particularly the consumer sentiment index, have been trending down quite markedly since the midpoint of last year. Clearly the heightened references and the growing attention being paid to the possibility of a no-deal Brexit and its increased possibility certainly has had a negative and adverse impact already on consumption behaviour in the domestic economy and on investment decisions. Part of the issue in the case of the Irish economy is that because the economy has been growing so strongly over the past couple of years, we perhaps have not detected the impact Brexit has already had. I would argue that it is there already, and that its impact can already be felt.

Financial markets would be able to factor in the impact of a no-deal Brexit, so that would mitigate or restrict the possibility of a really sharp financial sector shock. However, the analysis shows that Brexit clearly will be felt most in the real economy.