Disorder, Disorder


This morning.

Via RTÉ:

In its latest Quarterly Bulletin, the Central Bank forecasts 34,000 fewer jobs by the end of next year and 110,000 fewer jobs over the next ten years.

It said: “A disorderly Brexit would present enormous challenges for the Irish economy, especially in the near term, and would result in a loss of output and employment compared to a scenario where the UK remained in the EU.”

….The bank says that gauging the impact this could have on the Irish economy is “the most uncertain exercise” it has ever had to carry out.

110,000 fewer jobs after no-deal Brexit – Central Bank (RTÉ)



21 thoughts on “Disorder, Disorder

    1. Clampers Outside!

      “most uncertain forecast” = we have no idea, zilch, nada, not one iota what will happen.

  1. eoin

    The UK’s Bank of England, the equivalent of our Central Bank, has produced an estimate of the impact of a no deal Brexit on house prices, saying prices could fall by “up to 35%” in the UK.


    Why is our Central Bank not producing such an estimate? It has said there’ll be a negative impact but it won;t quantify it. Is it responsible for people in Ireland to take out 90% mortgages today on properties which may be worth 65% of today’s value in a year’s time. Do your bloody job Central Bank, you’re being paid handsomely enough for it.

      1. eoin

        Or maybe you should be like Michaeal O’Leary on 9/11 and place more orders for knock-down priced planes (no pun intended).

        I don’t know but I do think buyers should be given a range of possibilities and if the Central Bank can forecast job losses of 34,127 then it should be able to put a % on possible drops for house prices.

        The Central Bank has a particular responsibility in this area because most non-commercial lending is for mortgages. And if your €500,000 property is worth €300,000 next year and you still have a €450,000 mortgage and unemployment is rising, that’s a problem for our economy. Just ask the year 2008!

      2. martco

        I wouldn’t worry about gambling @Clampers

        nobody out there can afford to buy anymore anyway

        housing market is halted

    1. Owen C

      1. The BOE “35%” is not a forecast. Its a stress test. They pick a number and see how the banking sector would fare if that was indeed the outcome. As the BBC correspondent explains:

      “It was not a forecast. It was an apocalyptic test where the Bank deliberately sets the parameters beyond what might reasonably be expected to occur…The Governor believes that a “no deal” scenario would be bad for the economy. But not as bad as the headlines today which are based on a doomsday scenario that is not actually forecast to happen.”

      2. The CBI, the ECB and the EBA have already conducted similar analysis, so it appears they have been doing their bloody jobs. Similar to the BOE, they did not forecast a property price outcome, but modelled an adverse scenario outcome. This included a property price decline 19.8% below the 2020 baseline outcome (2020 baseline outcome being about 15% above the 2017 reference level, so 2020 adverse outcome would be 5% below 2017 reference level, or about 11% below today’s level).

      1. eoin

        That is highly misleading.

        The Bank of England specifically ran a no-deal Brexit stress test with a max 35% drop in house prices, that is correct. But the 35% wasn’t plucked out of the air, the full name for it is “stress test scenario” because the Bank of England *does forecast* the components of the scenario, and they forecast the components based on a no deal Brexit.

        That’s why any number of media carried the “Bank of England forecasts declines of up to 35%” headlines last September. I know Kemal Ahmed, he’s like Sean Whelan, he’s parroted what the Bank told him, but didn’t challenge them as to why 35% was selected.

        The Irish Central Bank hasn’t provided the workings for its 19.8% decline from 2020 price levels in the 2018 stress tests. The tone of pronouncements from the Central Bank in the past three months in particular has been negative in the case of a no-deal Brexit. Today, they’re able to forecast with great precision, unemployment. They most certainly can forecast house prices. They’ve said the effect will be negative in a no deal, but they don’t want to quantify it lest they spook the market, many people won’t buy today something which will be x% cheaper in a few months.

        I would say the prospective decline in a no deal is well north of 11%. It would be 11% just if only one large bomb exploded in Belfast city centre.

        If you considering the purchase of a house today for €500,000, would it really deter you if it would be worth only €445,000 next year based on an event, no-deal, which mightn’t happen? I don’t know. But if you said 25%, I think many people would hold off on their purchases, and that’s why I think the Central Bank is refusing to publish a forecast for house prices.

        1. eoin

          Take a look at Pg 17 of the EBA’s stress test scenarios for residential real estate. Is it really the case Ireland will be the #5 best performing out of the EU28, and better than the nine non-EU countries? Ireland, the country which will be, by common consensus, the country worst affected by a no deal Brexit?


        2. Owen C

          “the full name for it is “stress test scenario” because the Bank of England *does forecast*”

          From the BOE: “The stress applied under the ACS is not a forecast. Rather, it is a coherent ‘tail risk’ scenario designed to be severe and broad enough to assess the resilience of UK banks to a range of adverse shocks”

          It is literally a worst-case, coherent tail risk (ie it is not based on London being wiped out by an earthquake, it is based on an economic event somewhat worse than the 2008 financial crisis). But it is most definitely not a forecast. I can’t be clearer than that because that is literally their own words.

          1. eoin

            You can dress it up any way you like, but people are not stupid. If the Central Bank can today forecast unemployment in a no deal Brexit to the nearest 1,000 in an economy where there’s 2.3m at work, they can bloody well forecast house prices which have a direct impact on the balance sheets of the banks they’re supposed to be minding. I know it, you know, and the dog in the street knows it.

            And we can only assume it’s really bad news and being withheld from the public so as not to spook the property market where transactions will stall if people think there’s going to be a substantial correction in the next few months. I’m estimating a 25% decline from today’s levels in a no deal Brexit with disorder and violence around the Border.

          2. Owen C

            1. So we’re agreed the BOE -35% is not a forecast? Glad we got that done.

            2. Central Banks try to steer clear of asset price forecasts in the event of significant economic turbulence, because they generally don’t get within a country mile of doing it correctly (and nor does anyone). They’re actually a little better (but only a little) on macro stuff like GDP and unemployment where the flows and correlations are easier to model (ie if you had said Irish household debt would fall by c.35% over the last 10 years, no model in the world would likely have correctly forecast Irish house prices rising by c.80% and GDP growing by 50%).

          3. Johnny Green

            – “Central Banks try to steer clear of asset price forecasts in the event of significant economic turbulence”-duh!

            -from the latest BofE financial stability report:)

            “In a disorderly Brexit, a range of UK asset prices – including the sterling exchange rate, equities, corporate and government debt and bank funding costs – would be expected to adjust sharply, tightening financial conditions for UK households and businesses. ”

    2. Johnny Green

      Hi Eoin,they already estimated to be off over 19% from ‘baseline’ (LOL) 2014:)

      ‘House prices in South Kensington, one of London’s smartest neighbourhoods — and home to the Victoria and Albert Museum and the Royal Albert Hall — are falling rapidly. In the first quarter of this year, the average price of a prime square foot of property in the area was £1,800, according to Savills, 20 per cent lower than 2014 and a 4.4 per cent drop on last year’s values. Across prime central London, prices are down 19.1 per cent and 3.7 per cent respectively.’


      1. eoin

        Hi Johnny, 35% would bring today’s prices back to just over the February 2009 trough in the last UK recession. That doesn’t seem too exaggerated to me, if the UK has a major trading and people movement disruption with the rest of the EU.

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