Signed Articles: ‘Dealing with Friction: EU-UK Trade and the Irish Economy after Brexit’ & ‘The Foreign Exchange and Over-the-Counter Interest Rate Derivatives Market in Ireland’

10 February 2020 Press Release


The Central Bank of Ireland has published two signed articles from the first Quarterly Bulletin of 2020, which will be published on 12 February 2020.

‘Dealing with Friction: EU-UK Trade and the Irish Economy after Brexit’, by Thomas Conefrey and Graeme Walsh, examines the possible impact on the Irish economy of an EU-UK free trade agreement (FTA), if such an arrangement was to follow the current transition period.

The key findings are:

  • An orderly move to a FTA would result in smaller upfront losses than associated with a disorderly no-deal Brexit, but a basic FTA would still imply significantly higher trade frictions than exist today.  
  • The analysis estimates that a transition to an EU-UK FTA after 2020 would lower Irish output by around 3.5 per cent in the long run, with the unemployment rate 1 percentage point higher than if the UK remained in the EU. A more comprehensive EU-UK agreement than the FTA we model would reduce these losses.
  • In contrast, if the UK moves to trading on WTO terms after 2020 this would lead to a larger decline in Irish output of over 5 per cent. 
  • Whatever the precise nature of any future deal, no arrangement will replicate the degree of trade and economic integration of EU membership, creating significant challenges for exposed sectors of the Irish economy, particularly agri-food.

A second article, ‘The foreign exchange and over-the-counter interest rate derivatives market in Ireland’, by Simone Saupe, follows the results of the Bank of International Settlements Triennial Survey 2019, in which the Central Bank of Ireland participated.

The key findings are: 

  • The 2019 BIS Triennial survey results for Ireland show a substantial increase in Foreign Exchange (FX) and Over-the-counter interest rate derivatives trading during the last three years. The Irish trading volumes recovered from the downward trend recorded in the previous two surveys, and the growth rate of Irish derivatives turnover between 2016 and 2019 outpaced the global growth rate.
  • The main factor behind the strong Irish growth was that large global derivatives dealers opened or reactivated derivatives sales desks in Ireland as part of their overall business strategy and in preparation for Brexit.
  • The growth was mainly driven by an increase in FX and interest rate swaps, used for hedging foreign exchange risks and managing funding liquidity, in an environment of increasing economic uncertainties and excess liquidity in the euro area.


  • The views expressed in these articles are not necessarily those held by the Central Bank of Ireland.