Dáil Éireann Debate, Tuesday - 30 May 2017
144. Deputy Stephen S. Donnelly asked the Minister for Finance if he raised the relaxation of fiscal rules through the implementation of the unusual event clause in the context of the impact of Brexit on Ireland at the Eurogroup meeting on 22 May 2017; and if he will make a statement on the matter. [25409/17]
View answerI did not raise the possibility of utilising the unusual event clause when at the Eurogroup meeting last week as Ireland currently does not qualify for its use. As outlined for Deputy Doherty in PQ number 24 of the 18/05/2017 the Commission’s guidance on the implementation of the ‘unusual event clause’ in the preventative arm of the Stability and Growth pact (SGP) allows for exceptional spending directly linked to unusual events outside of the control of Government, if this spending does not endanger fiscal sustainability in the medium term. This clause is granted on the basis of individual case-by-case assessments and, to date, has only been granted to six Member States in light of refugee-related costs and to three Member States following submissions based upon security-related expenditure. It should also be noted that any Member State availing of this clause must still meet their SGP obligations when the additional spending on the unusual event provided for in the clause is excluded.
Accordingly, any application for leniency under this clause would require that Ireland demonstrate that the British exit from the EU has had a “major impact on the financial position of the general government”. Objectively, no such material impact on Ireland’s general government balance has been observed to date. This is not surprising given that the negotiation on the terms of the UK exit have yet to commence in substance and will not conclude until 2019.
Furthermore, the European Commission has repeatedly emphasised that budgetary discipline is assessed against reference values that do not differentiate amongst different types of expenditure. Any deficit-financed expenditure must be repaid through future taxes. Any rule that grants special treatment to certain kinds of public expenditures could create incentives for creative accounting.
Nonetheless Ireland will explore existing and possible future EU measures that could potentially assist Ireland in mitigating the effects of the UK’s withdrawal on specific Irish businesses and economic sectors. Ireland will also, in light of developments, continue to make a strong case at EU level that the UK’s withdrawal represents a serious disturbance to the Irish economy overall and that we will require support.
