Dáil Éireann Debate, Tuesday - 7 July 2020
185. Deputy Carol Nolan asked the Minister for Finance the way in which the financial and economic commitments provided for in the programme for Government will be affected in the event of a no-deal Brexit; and if he will make a statement on the matter. [14435/20]
Amharc ar fhreagraA failure to achieve a trade agreement between the United Kingdom and the European Union at the end of this year could have severe implications for the economy and the public finances, particularly when combined with the shock of the Covid-19 pandemic.
The Deputy will recall that Budget 2020 was framed on the prudent assumption of a disorderly Brexit in January 2020. While the economic scenario has changed dramatically since last October, the scale of the ‘swing’ in the fiscal position will provide some broad indication of the potential impact of the current transition period concluding without an agreement.
Budget 2020 projected a general government deficit in the order of €2.0 billion. This represented a negative swing of some €3.2 billion from the previous forecasts, driven, primarily, by the impact of a disorderly Brexit assumption.
These projections were a point in time forecast, and circumstances have, of course, now changed. The fiscal impact at this juncture may differ significantly from these historic figures. During the process of framing Budget 2021, my Department will take into consideration the impact of a range of potential risks to the economy, including that of a failure to agree a trade deal.
This work forms part of the whole-of-Government preparations for the end of the transition period on 31 December 2020, which is being taken forward on the basis of two scenarios: a limited Free Trade Agreement in goods (and an accompanying fisheries agreement) or a disorderly Brexit (i.e. without an EU-UK trade agreement).
