Dáil Éireann Debate, Tuesday - 30 May 2017
145. Deputy Stephen S. Donnelly asked the Minister for Finance if planning has started for a scenario in which no deal is reached in Brexit negotiations; if this planning has been completed; if he will publish the results of this scenario planning; and if he will make a statement on the matter. [25410/17]
View answerThe Department of Finance has been assessing and preparing for the impact of Brexit since well before the referendum on 23 June 2016. Work was carried out in the Department to assess the potential economic and financial sector implications arising, including the study, published in November 2015, under the ESRI-Department of Finance research programme, entitled 'Scoping the Possible Economic Implications of Brexit on Ireland'. The Department's work has been carried out within the whole-of-Government arrangements overseen by the Department of the Taoiseach.
Following the result of the UK referendum, work has been intensified across the whole of Government level, including in my own Department, to ensure that Ireland’s interests are protected in the negotiations at EU level and to ensure that Ireland will be in position to mitigate the negative economic impacts arising from Brexit. In my own Department, a Brexit Unit was established in July 2016, within the EU and International Division, to oversee and coordinate this work and to act as a key liaison point with the Department of the Taoiseach, in particular. In addition, the Department of Finance staff complement in the Irish Permanent Representation to the EU in Brussels has been strengthened. The challenge which we face as a result of Brexit is mainstreamed across all divisions of my Department and this is reflected in business planning.
The Department of Finance contingency work is ongoing and rightly continues to examine all scenarios, including the scenario of the UK leaving the EU without an agreement in place. This work is an important input to the whole-of-Government work being overseen by the Department of the Taoiseach. In accordance with its role, my Department continues to monitor the economic impacts and carry out relevant analysis, and to frame budgetary policy advice in this new context.
We know from our own published research that the potential impact on the Irish economy is significant. The medium to long term economic impacts of a ‘hard Brexit’ with reversion to the WTO trade rules are set out in the November 2016 joint paper with the ESRI ‘Modelling the potential macroeconomic Impact of Brexit on Ireland’. Looking at the effect ten years after a UK exit, a hard Brexit scenario results in the level of GDP being almost 4 per cent below what it otherwise would have been in a no-Brexit scenario.
It is important to recognise that the full impact of the UK's exit is only expected to materialise over time. As we cannot control the international environment, we will need to continue to improve our competitiveness, including by focussing on costs we can control, by boosting our productivity and ensuring sustainable public finances.
