Dáil Éireann Debate, Wednesday - 6 July 2016
192. Deputy Sean Sherlock asked the Minister for Public Expenditure and Reform the public expenditure contingency planning he is putting in place to provide for the potential economic shock arising from the decision of the United Kingdom to exit the European Union. [20102/16]
View answerPlanning for the potential implications of the result of the referendum on the UK's membership of the European Union is particularly challenging. Until Article 50 is invoked by the UK, the precise timescale for the UK's withdrawal from the EU is not known. The economic impact of the UK's exit from the EU will also very much depend on the nature of the new arrangements to be agreed between the UK and the EU.
The Government has adopted a Contingency Framework, coordinated by the Department of the Taoiseach, to map out the key issues that will be most important to Ireland.
The Summer Economic Statement (SES), published last month, set out the Government's medium-term strategy for sustaining economic growth and for budgetary policy and includes a macro-economic assessment of a UK decision to leave the EU outlining a potential adverse impact on the growth outlook.
The proposed budgetary strategy for 2017 set out in the SES is not expected to change materially following the result of the UK's referendum on EU membership. The majority of components feeding into the expenditure benchmark calculation for 2017 are included the European Commission's 2016 Spring Economic Forecast and, based on the forecasts in the SES, the 2017 budgetary strategy is consistent with compliance with the balanced budget rule. As noted in the SES, the Department of Finance will prepare a full macroeconomic projection in advance of Budget 2017. This will include updated estimates of economic growth taking account of developments up to that time.
As set out in the SES, in the period following achievement of the MTO, the projections provide for a €1 billion per annum contribution from 2019 onwards to a rainy day fund or contingency reserve. This provides a buffer against any unanticipated shocks to the economy.
The prudent economic and fiscal policies implemented over recent years have placed Ireland in a better position to deal with shocks arising from the UK exit from the EU. Unemployment has fallen from a peak of over 15% to 7.8%. Gross general government debt that peaked at over 120% of GDP is expected to fall to 88% at the end of this year. Net debt at the end of 2016 is forecast to be 76% of GDP.
Consistent with the careful and responsible approach taken by Government to date to contingency planning for the result of the UK referendum, the Government will, of course, continue to assess, seek to influence and respond to developments with a view to minimising the adverse impact of the result of the UK referendum.
