, services, capital and labour. trade, fdi and the labour market are the key channels for the macroeconomic effects of brexit. any agreement which keeps the uk access to the single market largely intact would have a more limited impact but the scale of the impact could be much more significant under a more restrictive agreement. in the short - term, downside risks for the irish economy, the uk and the broader european economies, arise mainly from the macroeconomic, financial and currency market effects of brexit related uncertainty. an important element of this uncertainty revolves around the terms of the relationship between the uk and the eu, how long it will take to work out that relationship and how it will impact in the interim. this heightened uncertainty could act to dampen consumer demand and investment decisions by firms. while the irish economy has become less reliant on the uk for trade over recent decades, the uk remains a particularly important market for many indigenous firms. some sectors, including agri - food, clothing and footwear and tourism continue to have a relatively high dependency on exports, consequently could be affected disproportionately. 5 / 7 bis central bankers'speeches the banks most recently published forecast for the irish economy and an updated projection to be published next week have taken account of the potential negative brexit effect. compared to a no - brexit baseline, projected gdp growth has been revised down by 0. 2 per cent in 2016 and by about a half of one percent in 2017. nevertheless even after these revisions, the outlook for the economy remains positive. ireland remains on track to be the fastest growing economy in the eu this year, for the third year running and a similar outcome is in prospect for next year. to conclude, against a backdrop of balance sheet repair for irish banks ’ combined with on - going deleveraging by irish households and smes, the irish economy continues to deal with the legacies arising from the crisis. risks and uncertainties remain, notably from the uk ’ s decision to leave the european union. nonetheless, economic activity continues to expand at a reasonably healthy pace. i would like to thank mary everett, mary cussen, terry quinn and micheal o ’ keeffe and for their contribution to this speech. the views expressed in this speech are personal and do not reflect the views of the commission of the central bank of ireland, or the eurosystem. see deaton angus, ( 2015 ) ‘ statistical objectivity is a

investment activity is subdued. the central bank's judgement remains that the domestic banking system is resilient to this downturn. in residential housing, an ongoing deficit in supply continues to drive prices domestically, and around 52, 000 new homes per annum could be needed to meet demand. despite these imbalances, there are no signs of excessive risk taking in mortgage credit, while aggregate mortgage credit growth remains moderate. more broadly, the irish economy is growing strongly and modified domestic demand is expected to grow in 2024 and 2025 at a faster pace than at the time of the last review. however as international investment and multinational enterprises ( mnes ) are central 1 / 2 bis - central bankers'speeches to the domestic economic model, driving a significant share of growth, public finances and employment, ireland is particularly exposed to global developments at a time of increased geopolitical and geoeconomic risk. moreover, with an economy performing at or above capacity, expansionary fiscal policy risks aggravating domestic pressures. irish households and businesses have been supported by a growing economy, but are also exposed to global shocks. households have weathered the period of higher interest rates, with the amount of income spent on debt repayments remaining stable. this follows a substantial decline in interest expenses in the decade after the global financial crisis ( gfc ). however, a shock to international trade could have knock - on effects for the labour market here, as well as the performance of domestic firms. irish small and medium - sized enterprises ( smes ) have shown resilience, but there are pockets of risk, for example with insolvencies rising in the accommodation / food and other services sectors although we have continued to observe employment growth in these sectors. domestic bank profitability has likely reached its cyclical peak, following strong growth over the last couple of years. however the banking sector is resilient and is well - placed to withstand any softening in profits. against this backdrop, we are maintaining an unchanged policy stance for macroprudential capital buffers. the counter - cyclical capital buffer ( ccyb ) rate remains at 1. 5 per cent. the central bank's mortgage measures aim to ensure sustainable lending standards and evidence suggests the measures continue to meet their objectives. recent developments in new mortgage lending show a shift towards lti and ltv limits, but the share of new lending in the most risky categories is contained. borrowing levels relative to incomes continue to be materially lower than in the early