Ireland’s exposure to international creditors makes the country more vulnerable to a no-deal Brexit shock, the chief of the national debt office Conor O’Kelly told reporters on Monday.
The UK is Ireland’s biggest trading partner while the risk of a no deal Brexit has increased since the former foreign secretary Boris Johnson is considered the frontrunner to succeed Theresa May as prime minister. Johnson has vowed that the UK will leave the EU on October 31st, “come what may,” even without a Withdrawal Agreement.
Ireland faces a big rise in borrowing if the UK crashes out of the EU without a deal in the autumn, adding to a mountain of debt accumulated big bank bailouts and budget deficits after the 2008 crush. The fear is that a disorderly Brexit would put pressure on Ireland to borrow an additional €27bn over the next four years.
Moreover, Irish finance minister Paschal Donohoe warned last week that 85,000 Irish jobs could be at risk in the event of a no-deal Brexit.
Currently, Irish public finances are booming, with Ireland achieving its first budget surplus in 2018. Borrowing over the last two years remains at historic lows with annual debt servicing costs set to have dropped by €3bn over the last five years. All things being equal, Dublin is projected to pay €4.5bn to service the Irish debt in 2020, down from €5bn in 2019.