‘No smoking gun of Brexit’ as economic pace cools

Economic growth cooled at the end of last year but there has been little appreciable Brexit hit across the economy, official figures show.

CSO figures show that GDP rose by the fast annual pace of 6.7% last year but only grew a meagre 0.1% in the final three months from the previous quarter, as construction investment contracted unexpectedly.

However, analysts said that more recent economic data, including jobs growth, the exchequer returns, and manufacturing output surveys, point to a cooling in the fast pace of growth of the economy, but there is little evidence that Brexit is weighing heavily.

There is “no smoking gun of Brexit” but there is a softening in the economic growth that is driven by Brexit, said Austin Hughes, chief economist at KBC Bank Ireland.

Nonetheless, Mr Hughes projected the economy will expand at the much slower pace of 3.5% this year on his view the Brexit process will be “soft but not smooth”.

Conall Mac Coille, chief economist at Davy, said people would struggle to find a major Brexit-related hit to the Irish economy in the CSO figures. The broker projects growth of up to 5% this year.

The CSO figures showed the multinational side of the economy continued to outpace domestic areas — information and communication firms surged by almost 31% despite the growing clouds over international trade as Chinese economic growth slows amid US president Donald Trump’s trade wars.

Imports of intellectual property by multinationals late last year continue to distort the GDP figures but the CSO noted that personal consumption, which it says indicates the strength of the domestic economy, grew by 3% in 2018. Capital Economics in London said the economy here was “still growing fairly strongly” in the face of the risk of Brexit.

Meanwhile, the annual costs of rents and mortgage interest payments are rising much faster than the overall level of inflation, CSO figures show.

Rents were 5.7% more expensive in February from a year earlier, while home interest payments were 1.9% higher.

Car insurance costs have fallen 5.4% in the year, according to the CSO figures.