Dáil Éireann Debate, Friday - 16 December 2016
116. Deputy Darragh O'Brien asked the Minister for Finance if his Department is considering any specific and targeted financial measure to ensure that Brexit does not lead to greater regional imbalance; and if he will make a statement on the matter. [40561/16]
View answerThe UK referendum on EU membership presents an important challenge for the Irish economy, both nationally and at a regional level. I have already introduced a number of actions and measures in response to this challenge.
As the Deputy will be aware, my Department incorporated the potential impact of Brexit into the macroeconomic forecasts that underpinned Budget 2017. My Department also published an in-depth sectoral analysis of the Irish economy and highlighted those with the greatest trade exposure to the UK. As part of this work, regional issues were also highlighted, particularly with respect to the location of employment and enterprise. In light of my Department's sectoral and regional findings I announced a number of measures in the Budget, with a view to getting Ireland "Brexit ready". The detail of these sectoral measures include;
- The retention of the 9 percent VAT rate to assist the hospitality sector.
- A reduced Capital Gains Tax relief to help entrepreneurs and bring the relief more in line with that in operation in the UK.
- An extension of the Foreign Earnings Deduction (FED) until the end of 2020, in order to assist with the diversification of trade into non-traditional export markets for Irish goods and services.
- The Special Assignee Relief Programme (SARP) is also extended until the end of 2020. The extension will provide certainty for foreign direct investment in Ireland, following on from the UK vote to leave the EU.
- The introduction of an income averaging "step-out" in the agriculture sector, to help with the volatility Brexit may bring. In addition to this a €150 million loan fund will be provided jointly by the Strategic Banking Corporation of Ireland and EU Exceptional Adjustment Aid to enable farmers to better manage their cash flow and reduce the cost of borrowing.
- At a macroeconomic level, Budget 2017 sought to build up Ireland's buffers to any fallout from Brexit. This involved setting a new domestic target of a debt to GDP ratio of 45 percent to be reached by the mid-2020s, or thereafter, depending on economic growth, as well as the establishment of a rainy day.
- The measures introduced in Budget 2017 are just the start of a process of getting Ireland Brexit ready. More measures will be implemented as the EU-UK negotiations develop after Article 50 is invoked. As with Budget 2017, these measures will have a regional dimension where appropriate. Indeed, as a key priority in the Programme for a Partnership Government, the Government will shortly publish a new Action Plan for Rural Ireland. The Action Plan will be a whole of Government approach to the challenges facing regional and local communities, including those presented by Brexit.
