Dáil Éireann Debate, Thursday - 25 February 2021
58. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which he has studied the effects of Brexit on all sectors of the economy; his plans to encourage recovery thereafter; and if he will make a statement on the matter. [10874/21]
View answer59. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which the effects of Brexit have been felt throughout the economy; his plans for short or long-term proposals to address issues arising; and if he will make a statement on the matter. [10875/21]
View answerI propose to take Questions Nos. 58 and 59 together.
My Department has been to the fore in producing and funding a number of assessments of the extent of the economic impact of Brexit, identifying the most exposed sectors and looking at both the short and medium term impact of Brexit in different scenarios.
The studies undertaken by my Department, found that negative impacts will be most severely felt in those sectors with strong export ties to the UK market – such as the agri-food, traditional manufacturing and tourism sectors and also SMEs generally.
In terms of those exposed sectors; the recently concluded Trade and Cooperation Agreement between the EU and UK is a positive conclusion to the transition period. However, the new agreement still represents a break from the previously existing arrangements; i.e. a permanent shock to our economy.
Therefore, even with the new Trade and Cooperation Agreement, Brexit will still have a negative economic impact on the Irish economy - particularly in the most exposed sectors in comparison to the previous trading relationship with the UK.
Joint research published by my Department and the Economic Social Research Institute (ESRI) in March 2019 on the macroeconomic implications of Brexit, captured a range of possible future relationships between the EU and the UK. This research included a limited Free Trade Agreement (FTA) scenario (based on a zero-tariffs and zero-quotas goods-only agreement), which is broadly in line with the recently concluded Trade and Cooperation Agreement.
Under this Free Trade Agreement scenario the level of GDP would be around 2 per cent lower over the medium-term (i.e. 5 years) and 3 per cent lower over the long-term (i.e. 10 years), compared to a situation where the UK remained in the EU.
The Government is also cognisant that while the Trade and Cooperation Agreement will protect Irish exporters from the more significant impact of a ‘no-deal’ scenario, Irish firms will still be impacted by the change in trading arrangements.
However, to prepare our economy for the impact of Brexit, the Government in Budget 2021 allocated unprecedented resources to confronting the twin challenges of COVID-19 and Brexit, with €340 million to be spent on Brexit-related measures. When these measures are taken into account, Brexit related expenditure to date is over €1 billion.
In addition, the European Commission’s proposal to allocate €1 billion from the Brexit Adjustment Reserve to Ireland is welcome. The 25 per cent share of the fund initially allocated to Ireland reflects the research undertaken by my Department which shows the disproportionate impact of Brexit on Ireland.
Looking ahead, the Irish Government remains focused on protecting our economic and financial interests, and will continue to work to minimise the disruption that Brexit will have on the economy and peoples livelihood’s to the greatest extent possible.
