Wednesday, 19 June 2019

Questions (61)

Michael McGrath


61. Deputy Michael McGrath asked the Minister for Finance the status of preparations for a no-deal Brexit; and if he will make a statement on the matter. [25493/19]

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Written answers (Question to Finance)

The European Council in April 2019 agreed to an extension of the Article 50 process until 31 October 2019, following a request by Prime Minister May. The extension includes giving the UK flexibility to leave before that date should the Withdrawal Agreement be ratified.  The European Council decision made clear that the Withdrawal Agreement, including the backstop, cannot be re-negotiated and that any unilateral commitments by the UK Government should be compatible with the letter and the spirit of the Withdrawal Agreement. We welcome these important assertions.  The European Council also agreed that should the UK’s position on the EU-UK future relationship evolve, the EU is prepared to reconsider the political declaration on the future relationship.

The Government remains focused on the ratification of the Withdrawal Agreement as the best way to ensure an orderly withdrawal of the UK from the EU and to fully protect the Good Friday Agreement. The decision of the European Council provides the UK with more time, until 31 October, to ensure an orderly withdrawal. However, the risk of a no deal Brexit remains. The preparations for all possible scenarios, that have been taking place since before the Brexit referendum, are therefore continuing. Brexit in all scenarios will have negative consequences and as a Government we are determined to be as ready as we can be.

The Government’s Contingency Action Plan, published on 19 December 2018, sets out comprehensive, cross-Government preparations that have been taking place over the last three years. This work continues at both a national and EU level. Last week, on 12th June, the Commission issued its fifth Contingency Communication which updates and reinforces the necessary no deal Brexit preparedness measures at EU level.

The Government has been taking key decisions to advance the implementation of our Brexit preparations. The Withdrawal of the United Kingdom from the European Union (Consequential Provisions) Act, was signed into law by the President on 17 March 2019. The Act complements legal measures at EU level and focuses on measures protecting our citizens and supporting the economy, enterprise and jobs, particularly in key economic sectors.  The Act is primarily intended for a no deal scenario, and most of the Act will not be commenced should the Withdrawal agreement be ratified. The legislation which I proposed in the areas of Taxation and Financial Services is an important part of the whole of Government response to Brexit, as it will ensure continuity of access for business and citizens in relation to certain taxation reliefs and allowances, as well as enabling insurance undertakings to continue to fulfil contractual obligations to their Irish customers, in a no deal scenario.  

The Government has also taken important steps to prepare our economy, including through dedicated measures announced in Budgets 2017, 2018 and 2019, supported by long-term planning through the National Development Plan and the National Planning Framework which will provide significant investment in Ireland’s public capital infrastructure.

As Minister for Finance, my objective is to protect the economic and financial interests of the State and to support the work of the Revenue Commissioners so as to minimise the Brexit disruption to trade, to the greatest extent possible. My Department is working within the whole-of-Government approach and is coordinating closely with its agencies who are developing and implementing plans and measures to protect our economy.

The Central Bank has statutory responsibility for financial stability and has been focused on Brexit since before the UK referendum. The Central Bank has been working closely with financial services firms to ensure that they have contingency plans in place for end March 2019, and they are now using the extended deadline to further prepare to cope with the possible effects of Brexit, with as little disruption for consumers as possible.  In relation to funding the State, the NTMA’s strategy continues to take account of the market dislocation risks posed by Brexit. The Exchequer’s funding position is strong.

Within Revenue, there is a very significant program of work that has been ongoing in terms of ICT, staffing, and trader engagement. Additional physical capacity is in place at ports and airports to apply checks and controls, in a no deal scenario. This work will ensure that the Revenue Commissioners are prepared to facilitate the efficient movement of legitimate trade to the maximum extent possible in a no deal scenario.

I am satisfied that my Department and its relevant agencies are continuing to work to ensure that they are as prepared as possible to limit the inevitable disruption to consumers and trade, post Brexit.  

As a Government we will continue to strongly encourage businesses and citizens to do the same. For instance, businesses that trade with the UK should apply now to the Revenue Commissioners for their customs number (EORI). The Government website is an important resource in this regard and contains information on a range of Brexit supports and advice, as well as an overview of the institutions offering financial assistance to businesses such as the SBCI, Microfinance Ireland, Intertrade Ireland and Enterprise Ireland.