Dáil Éireann Debate, Tuesday - 18 December 2018
148. Deputy Lisa Chambers asked the Minister for Finance if he will report on recent discussions and meetings he has had with officials from the Central Bank regarding Brexit and the resilience of the economy to withstand a no-deal Brexit; and if he will make a statement on the matter. [53074/18]
Amharc ar fhreagraI, and my officials, have regular meetings and discussions with officials from the Central Bank of Ireland, in which Brexit is a regular topic. This engagement has enabled myself as Minister and my Department to ensure that full account of the impact of a hard Brexit is being taken into account.
The Central Bank has statutory responsibility for financial stability. It has been working on Brexit related issues since before the UK Referendum. It is working to ensure that financial services firms are adequately prepared to cope with the possible effects of Brexit, with as little disruption for consumers as possible. This work is being done on the basis of plausible worst-case scenarios. The Central Bank will continue to work with financial services firms and actively engage in constructive fora.
In terms of my Department’s engagement with the Central Bank;
- Brexit has been a standing item on every meeting this year of the Financial Stability Group (FSG), which comprises the senior management of the Department of Finance, the Central Bank and the NTMA.
- In order to further co-ordination and co-operation on Brexit issues, the FSG established a Brexit Contact Group (BCG), which has met 10 times this year. The BCG consists of officials from relevant areas of the FSG agencies, provides a vital forum for sharing information on Brexit-related financial services issues and for providing me with detailed information on these matters.
- The FSG also established a sub-group to deal with the particular issue of a Central Securities Depository, which is an important piece of Post Trade Market Infrastructure. The Department of Finance and the Central Bank are continuing to engage with Euronext (formally the Irish Stock Exchange) and other relevant stakeholders including European Authorities to ensure that a settlement solution, that minimises disruption to the Irish market post-Brexit, is found. This remains a priority.
Furthermore, the Department has been working to ensure that the Irish economy is in a good state of resilience to withstand a No-deal Brexit. Over recent years, Ireland has laid the foundations for a solid and sustained economic recovery. Indicators such as consumer spending and labour market developments are consistent with an economy that is maintaining momentum.
Since the UK referendum in 2016, all of our national Budgets have been framed to prepare for the challenge of Brexit. The economic and fiscal policies which we have pursued have placed Ireland in a stronger position to ensure that the economy will continue to remain competitive in the face of future economic headwinds.
Budget 2019 continued the overall approach of prudent financial management to strengthen the resilience of Ireland’s economy against the backdrop of heightened uncertainty, including from Brexit, including through:
- eliminating the headline deficit;
- achieving the medium-term budgetary objective;
- building up the Rainy Day Fund;
- reducing the debt burden;
- investing in infrastructure to boost competitiveness and productivity; and
- investing in education.
The focus of Government budgetary policy is on having the appropriate fiscal stance. This is not measured on the basis of what is legally permissible within the fiscal rules but on what is right for the economy at this point in the cycle.
From a budgetary perspective, this facilitates the building-up of fiscal capacity which can help mitigate against future negative risks and potential shocks.
In an increasingly unpredictable external environment, continued fiscal sustainability remains a priority. Specifically, it is currently projected that Ireland will achieve its medium-term budgetary objective of a balanced budget in 2019.
