Thursday, 26 September 2019

Questions (1)

Michael McGrath


1. Deputy Michael McGrath asked the Minister for Finance the status of the preparations for a no-deal Brexit; the further steps he plans to take in the coming weeks to prepare for this scenario; and if he will make a statement on the matter. [39206/19]

View answer

Oral answers (6 contributions) (Question to Finance)

The purpose of this question is to raise the issue of the preparations that are being made for all Brexit scenarios, in particular the possible scenario of a no-deal Brexit. Now that we are just five weeks away from the end of October, I seek more clarity on what work is ongoing with the European Commission on cross-border trade and potential checks that may arise in that scenario, and if the Minister can advise the House and the public as to the overview and scope of what he is planning in the context of the budget in a no-deal scenario.

The Government has been actively preparing for Brexit since the referendum took place. While a no-deal Brexit will never be Ireland's or the European Union’s choice, the risk of a no-deal remains significant and, therefore, no-deal preparations have the highest priority across Government. The aim of the Government’s preparations is to make sure that Irish citizens and businesses are as ready as possible for a no-deal Brexit, as set out in the Government’s most recent contingency action plan. That plan set out in detail our analysis of the risks and impacts of a no-deal outcome across a range of key issues and sectors, and the extensive work ongoing across Government to mitigate these risks. The plan follows on the enactment of the Brexit omnibus Bill earlier this year and the roll-out of a comprehensive programme of stakeholder engagement. 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 Brexit disruption to trade to the greatest extent possible. My Department and its agencies are advancing preparations within the whole-of-government framework overseen by the Departments of Foreign Affairs and Trade and the Taoiseach. The Government has already taken important steps to prepare our economy in each of the last three budgets.

In response to the questions the Deputy put to me, on the overview of where we are from a budgetary point of view, that will be consistent with the budgetary framework I published as part of the summer economic statement, where I outlined the range of deficits that might be possible if we are in a no-deal scenario. There has been engagement with the European Commission, which has primarily centred around some sectors such as, for example, what could happen to agrifood in the future or the area of policy flexibility in respect of the deployment of our own resources.

I thank the Minister for his reply. While there may be a growing view in political circles that Brexit may not come to a head at the end of October and that it may not be the end of it, the reality is that we are now just five weeks away from a potential cliff-edge, no-deal Brexit. People who are engaged in cross-border trade will want to know at what stage are these discussions with the European Commission. Then there is the "when" question. When does the Government expect to give people an indication, and subsequently the detail, of the measures that will be in place to protect Ireland's position within the Single Market, while also protecting the Good Friday Agreement and the all-Ireland economy? In the context of the budget, can the Minister confirm that in his no-deal Brexit package, he intends to set out an overall scenario that will go beyond the €2.8 billion package, perhaps well beyond it, but that the additional money will only be called upon in the event of a no-deal?

To work through each of the Deputy's questions, the answer to his final question is "Yes". My objective is to be outlining a set of supports that are available only in a no-deal setting. On the magnitude of the supports, while it would be up to each Minister to outline the detail of how funding would be made available in a no-deal setting, what I will be doing on budget day is announcing the overall framework and the figures that are against that. I refer to our engagement with the European Commission on how we will protect our place in the Single Market.

As we debated in the Committee on Budgetary Oversight recently, I have no doubt of the sensitivity and concerns the House and communities will have in regard to any measures we might have to contemplate in a no-deal setting, and I absolutely understand this. However, one of the issues we will need to consider, if we end up in a no-deal setting, is how we can continue to give assurances that Irish exports are consumed as Irish exports elsewhere in the Single Market. That is fundamental to our identity and our economic prospects as an exporting nation. That work is ongoing with the Commission but I want to re-emphasise to the Deputy that I am well aware of the many concerns colleagues have in regard to that matter.

To be fair, all parties in this House have adopted a very supportive position in regard to Brexit and we have afforded Government the time and space to work through these issues. However, we are coming to a point now, just five weeks out from a no-deal Brexit, where people deserve to know and will want to know because they want to make preparations and plans. Can the Minister tell the House and, more important, tell the people when the details of the outcome of those discussions with the European Commission around what will happen in terms of cross-border trade in a no-deal scenario will be made available and published?

In regard to the budget, he did not confirm the position I put to him, which is that the Brexit package that will only be deployed in a no-deal scenario will go beyond the €2.8 billion. Has he finalised at this stage the extent to which it will go beyond that €2.8 billion?

I acknowledge the supportive tone that all colleagues and parties have offered in dealing with the consequences of Brexit, in particular a no-deal Brexit. With regard to the Deputy's repeated question on whether the resources will go beyond €2.8 billion if we are in no-deal setting, the answer is "Yes". The consequences of dealing with more people becoming unemployed or of having to support parts of certain sectors will mean reducing a surplus we would otherwise have and moving into what I would aim to be a temporary deficit.

On the Deputy's second question regarding when the engagement with the European Commission will come to an end, much of that depends on the engagement that will happen between the EU and the UK in the run-up to the European Council. I take the Deputy's point. If we move into October, Irish businesses will need to know what the contingency plans are. To agree with a point he made earlier, if a no-deal Brexit is averted on 31 October by means of, for example, an extension, that means the risk then shifts fully into the year which this budget oversees. The risk, therefore, is still there and it is absolutely within the time period in which the House expects budgetary decisions to be made.