Brexit, housing, the general economy & everything in between

Alan Ahearne

Alan is currently a Professor of Economics and Director of the Whitaker Institute at the National University of Ireland, Galway, and has also taught economics at UCD, DCU and the Carnegie Mellon University. He is Chairman of the Joint Economic and Social Research Institute (ESRI) and Department of Finance Research Programme on the Macro-economy and Taxation and a member of the Independent Review Group set up by the Minister for Health, Simon Harris in December 2017 to examine the removal of private practice from public acute hospitals.

Coined by the Independent News and Media Group as “the man who told you so”, Alan is an internationally renowned economist, and was one of the very few people that spoke out before the economic collapse warning that the country was headed straight for it in 2007. With working experience serving as a special advisor to Brian Lenihen in 2011 and in the United States where he served as external advisor to the Strategy, Practice and Review Department of the International Monetary Fund, advising IMF senior management on how the Fund could better support the efforts of countries at all levels of income to boost growth and create jobs in the period ahead.

We talk Brexit, property, housing, the general economy and everything in between.



“We are a small economy so things that happen abroad certainly have a big impact on us. That’s not to say that there is nothing we can do for ourselves. If we do good policy we are likely to be more resilient and likely to fight off negative shocks and take advantage of good things that happen.”


Conversation about Brexit

  • Hard Brexit might have a serious effect on the Irish economy because the UK is a large trading partner
  • Trade barriers may rise – customs duties, borders (agriculture and agri-food)
  • Migration and controlling the borders – the main reasons for Brexit
  • “Brexit, whether is soft or hard, will be bad for UK economy”


Impact of Brexit on London and financial services

  • Soft Brexit will slow down the growth of the British economy, but not cause a financial crisis
  • Financial services not be included in free trade agreements – better for European capitals


How can SMEs from Ireland can go through hard Brexit

  • Need to diversify – open new markets in other countries


Sectors which are in danger of hard Brexit

  • Agri-food and haulage industry
  • Affected supply chain – importing and exporting businesses (ex. getting supplies from the UK – medical devices, pharmaceutical products, IT)


Benefits and opportunities for Ireland after Brexit

  • Dublin will benefit an area of financial services
  • Disrupted trade – Irish exporters might be hurt by hard border
  • Exporting goods and services replacing British exportersish language


The property market

  • External shocks may impact Irish economy
  • Problems in the property market – different than in 2007, will not cause a crisis
  • “Central Bank has rules in place… and those rules will do a lot to guard against a sort of bubble that we have seen previously”
  • Central Bank rules limit the increase of property prices
  • Big increase of supply of houses may cause prices to drop


Interests rates

  • European Central Bank expected to raise interest rates. Federal Reserve in the US is already doing it
  • No rapid increase, but in the long term interests rates are expected to grow


Lessons from the Federal Reserve for Ireland

  • “When the sun is really shiny, you need to be careful and you need to save for a rainy day.”


Would you buy a property now?

  • It depends on the specific situation, sysyemic shocks


The European Union & Ireland

  • Instrumental in bringing peace between countries
  • Economically positive – increased trade, rules-based, positive business environment
  • By the construct mess is inevitable


Competitive advantages of US capitalism over EU economy and emerging Asian economies

  • Technological progress and innovations come from the US
  • The ability for new businesses to emerge and grow
  • Research and development
  • China is also superpower economy – growing very fast


US relations with China

  • Current tariffs do not impact the global economy
  • If tariffs escalate they might slow down the global economic growth


Impact of US debt on the American economy

  • The current debt is manageable
  • There is no stress on financial markets
  • If interests rates stay relatively low the debt can be controlled


State of the Irish economy

  • What happens abroad has a big impact on Ireland economy
  • Ireland has to be competitive, keep up with trends, technologies and innovation and invest in education keeping a skilled workforce


Understanding the future of the property market

  • Current problems due to too low housing supply
  • Challenge – lack of experienced construction workers
  • Dublin should be scaled upwards


Is the land use in Ireland used effectively?

  • Shortage of good public transport, the need to build upwards


The future of the Irish economy and its stability

  • The economy is in good shape and growing strongly – consumer spending and jobs are rising
  • Rather external than internal aspects may have a negative impact


Understanding “fiscal space”

  • How much money a government has that can be spent or given away in tax cuts
  • The economy currently does not need fiscal stimulus so fiscal policy is kept tight


Risk of the economy becoming overheated

  • Signs – excess demand for housing, full employment, difficult to retain stuff, upper pressure on wages
  • There is a risk that the Irish economy will get overheated


Investments in an educational system, innovation and R&D

  • Businesses and nation are underspending on R&D


Ireland and Foreign Direct Investment

  • Multinational companies have a positive impact on the economy
  • Ireland has to have world-class SME sector and be open for innovation


Advice for first-time buyers

  • “Be cautious – it doesn’t mean they shouldn’t buy but they… would comfortably be able to meet their repayments”


Ireland attracting and retaining talent

  • The country needs to provide well-educated, skilled people


Advice for a college student entering the workforce

  • Getting different experiences, accumulating knowledge


Advice to the current government

  • “Talent, talent and talent. Keep your eye on talent”
  • Developing, attracting and retaining talented people will help long-term growth


Future of the Irish and wider global economies

  • Lots of things may go wrong but it will likely continue to grow