Dáil Éireann Debate, Thursday - 26 November 2020
215. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which he remains satisfied regarding the adequacy of actions to date to combat the economic impact of Brexit; and if he will make a statement on the matter. [39464/20]
View answer216. Deputy Bernard J. Durkan asked the Minister for Finance his plans for further Brexit-related economic interventions; and if he will make a statement on the matter. [39465/20]
View answerI propose to take Questions Nos. 215 and 216 together.
My Department has been preparing for Brexit since before the UK referendum in 2016, and this work has intensified ahead of the end of the transition period on 31 December.
The central scenario underlying Budget 2021 assumes the transition period ends without agreement. The macroeconomic projections underpinning Budget 2021 have been developed with reference to several assessments of the macroeconomic impact of Brexit that my Department has funded and produced, including research into the inter-relationship between Covid-19 and Brexit on short-term economic prospects.
Brexit, in whatever form it takes, will have a negative economic impact on the Irish economy and living standards: there is no good Brexit. Regardless of the outcome of the Future Partnership negotiations, the UK will be outside the Single Market and Customs Union from 1 January 2021. This will have significant and lasting implications, particularly for businesses moving goods to, from or through Great Britain. Any future trading arrangement that is different to the existing arrangement will represent a permanent shock to the Irish economy.
What we can do, and what we have been doing, is take appropriate action to mitigate these negative effects. Overall, Budget 2021 provides €340 million for measures to prepare for Brexit through the continuation of existing measures as well as a number of new supports. This is on top of more than €700 million of measures in successive Budgets since 2017. Budget 2021 also includes a number of enhancements to existing tax-based measures in support of sectors and enterprises likely to be most affected by Brexit.
Further, Budget 2021 includes provision for a €3.4 billion Recovery Fund, the equivalent to c. 1.7 per cent of GNI*. The purpose of the Fund is to provide maximum flexibility to allow Government respond swiftly and decisively to the evolving public health and economic situation, including the fall-out from the ending of the transition period.
The Recovery Fund was designed to be flexible and is a deliberate effort by Government to allow, within the budgetary framework, for the unprecedented level of economic uncertainty that currently prevails. The uncertainty relates to both the trajectory of the Covid-19 pandemic and to the form that the post-transition trade with the UK takes.
