I expect the character and composition of Ireland’s international financial services sector is going to fundamentally change in a number of ways as a result of the extensive financial services investments won in recent years, including Brexit relocations and the pipeline of future projects. The industry in Ireland is going to become deeper and more diverse. My Department has been working with other relevant Departments and state agencies, such as the IDA, to fully capture any opportunities for inward investment that emerge through promoting Ireland as a committed English-speaking member of the EU with unfettered access to the EU Single Market, our continued access to EU talent and that of the Common Travel Area, in addition to our pro-business environment underpinned by a strong, fully-independent financial services regulator in the Central Bank of Ireland.
The Central Bank of Ireland has been focused on the impact of Brexit on financial stability, for which it has statutory responsibility, since before the UK referendum. It is working closely with financial services firms to ensure that they have contingency plans in place for the end of the transition period on 31 December, and that they are adequately prepared to cope with the possible effects of Brexit, with as little disruption for consumers, investors and markets as possible. On the basis of its work and engagement across the sector, the Central Bank has been able to assure me that, while some level of market disruption is inevitable, the financial system as a whole should be resilient enough to withstand a hard Brexit and that the most material ‘cliff edge’ financial stability risks arising from Brexit have been largely mitigated.
Furthermore, my Department recently worked with the ESRI on an examination of the sectoral overlap of COVID-19 and Brexit shocks, which found that there is limited overlap in the sectors exposed to the different shocks, and limited connection between the sectors exposed to each shock. In this regard, exposures to Brexit in the area of financial services should not be magnified by additional exposure to Covid-19.
The 2020 Brexit Bill includes a number of measures which will minimise disruption. This includes measures in relation to settlement finality, and to enable UK and Gibraltar insurance undertakings and intermediaries to continue to fulfil contractual obligations to their Irish customers following the end of the transition period.
On Tuesday 22 September the milestone of 100 days left until the end of the transition period passed. Regardless of the outcome of the negotiations between the EU and the UK on the future relationship, the UK will not have the same access to the EU’s Single Market for financial services that it enjoys today. This will mean change. The Brexit Readiness Action Plan, published by the Government on 9 September, clearly sets out that firms in the financial services sector should finalise their readiness and contingency plans and take necessary actions in accordance with the relevant European Commission guidance. In addition, the Central Bank website contains FAQs on Brexit which are targeted at both financial services firms and consumers. My Department will continue to work closely with the Central Bank of Ireland and the NTMA to monitor the situation as we get closer to the end of transition, and to identify any emerging risks.