It is almost like there are two parallel economic universes. In one, everyone worries about Brexit and Trump and the impact they will have on the international economy and on growth here. In the real world, growth continues at a decent pace.
The environment here is reliant on what happens internationally. In recent months we have benefited from the better-than-expected performance of the UK economy after the Brexit vote. A relatively strong economic performance in the euro zone has also helped, boosted by the ECB’s easy money policy, which is helping to hold down our national borrowing costs.
This positive momentum is all showing up in our national statistics. Davy stockbrokers, in all analysis of recent data, conclude that signs of a slowdown in the second half of last year following the Brexit vote “have now completely reversed”. There may be prophesies of economic doom relating to Brexit and to the policies of the Trump administration, but so far consumer and economic confidence has proved remarkably resilient. Go figure.
It is easy to see the potential risks ahead, of course, but very difficult to predict exactly what will transpire. Perhaps, in this environment, the only sensible thing for businesses and consumers to do is to just get on with it – and that is exactly what they seem to be doing, though no doubt businesses are also starting serious contingency planning for Brexit.
The question now is whether the big international events will have enough of an impact this year to have a noticeable impact on our growth. Brexit talks will start in earnest next April, but Britain will not leave the EU until spring 2019, at the earliest. The implications of a hard Brexit, however, could be significant, especially for the food sector and Border areas.
In relation to the Trump presidency, the most likely immediate impact is some slowdown in inward investment as companies wait and see what happens. However there is also a significant risk of serious trade tensions emerging, taking a greater hit on confidence.
This was to be the year when Irish economic growth slowed from its rapid post-crash recovery. But one month in, the economy is still steaming along. Brexit and Trump loom large, but so far growth remains remarkably buoyant.
