THE GOVERNMENT HAS laid out its financial plans for responding to the impact of Brexit, with a total package of €1.2 billion.
This is broken down into three main headings: €650 million to support agriculture, enterprise and tourism sectors, and to help stabalise the worst affected regions; €365 million in Social Protection measures; and €45 million for “labour market activation supports”.
It’s estimated that Ireland’s GDP would shrink by 0.6% in the event of a no-deal Brexit, and that around 100,000 jobs would be at risk, 10,000 in the tourism sector.
Finance Minister Paschal Donohoe, announcing Budget 2020 measures today, said the government must increase the level and range of supports to ensure the economy is protected.
“I hope to never access the billion euro in funding,” Tánaiste Simon Coveney said at a Brexit briefing afterwards, adding that it was a strange thing to say on Budget Day.
I hope to be able to tell Paschal Donohoe, to take back the money, because it’s not needed. Because we have an orderly and managed Brexit.
“This Budget has been framed by Brexit,” said Minister of State for European Affairs Helen McEntee, who asked people and businesses to engage in Brexit preparations if they hadn’t yet done so.
In the event of a no-deal Brexit, the Irish government will intervene to further protect the economy, and this will be with borrowed money.
If the country does not need it, the government will not borrow it, Donohoe stressed – but added that a no-deal Brexit was its “central scenario”.
If Ireland is faced with a no-deal situation, €650 million will be made available to support the most vulnerable sectors - agriculture, enterprise and tourism - and to assist the most affected citizens and regions in the country.
Of this, €220 million of that fund will be deployed immediately after a no-deal Brexit. It will be divided into two streams: one an enterprise stream to fund “limited, targeted interventions for vulnerable but viable enterprises”; and an agriculture stream to fund “time limited interventions for the beef and fishing fleet”.
€200 million in funds will be available next year no matter the outcome of Brexit.
Preparation has already been made for Brexit in three sectors, but additional funding has been allocated in this budget to continue that progress: to increase staff at a number of departments and agencies (an extra €50m); upgrade infrastructure at ports and airports (an extra €160m), and invest in technology and facilities management (an extra €110m).
“This is to ensure we are ready for Brexit, whatever form it takes,” Donohoe said.
The €110 million for enterprises has been identified for the first wave of funding for targeted new interventions to help vulnerable firms adjust.
“These interventions will support firms of all sizes at all levels of difficulty with a particular focus on sectors most exposed, including food, manufacturing and internationally traded services,” he said.
Support will be by way of grants, loans and equity investment and will include:
Funding of €14 million was already made available for the Department of Enterprise to hire Brexit staff in 2017, 2018, and 2019.
This is separate from EU funding that will also be available – such as the European Globalisation Fund and the Solidarity Fund.
€110m will be provided through the Department of Agriculture, Food and the Marine in the event of a no-deal Brexit, which Minister Michael Creed said was the Department “most exposed by Brexit”.
In 2018, the Department’s exports were worth over €14 billion, of which €5.2 billion was exported to the UK market.
“We have 300,000 tonnes of beef – over 50% of all the production – going to the UK market,” he said adding that tariffs posed a “very significant exposure and additional cost for our exports of beef into the UK”.
In a no-deal scenario, if you take on the other side of the Department, the fishery side, 60% of our most valuable stock is caught in UK waters. So the displacement of a hard Brexit that exposes that sector, which is rural peripheral coastal catching jobs and processing job very significantly exposed.
Minister of State Michael D’Arcy said the provision of immediate supports for the beef sector will be the first priority in the event of a no-deal Brexit.
The ‘phase one’ investment of €110 million can be broken down to:
This will focus on:
“Tourism is a sector that has already begun to feel the effects of Brexit,” Transport Minister Shane Ross said.
“Since the UK referendum result, the weakening of sterling has meant that this year, the revenue for British visitors is likely to be over €100 million less than it was in 2016.”
Fáilte Ireland have estimated that a no-deal Brexit would cost the sector €380 million, with 10,000 jobs losses. In this case, the Department and agencies would work to attract tourists from Europe and North America, as well as other markets. They would also put an emphasis on regions that suffer the most in a no-deal Brexit.
Donohoe said €365 million will be also provided for extra social protection expenditure to support those at risk of losing their jobs or who have lost them as a result of a no-deal Brexit.
A further €45 million will be rolled out to assist people to transition to new work.
It had been planned that the minimum wage would be increased by 30 cent to €10.10, but Minister Regina Doherty said at a briefing this evening that it has been deferred – Cabinet has given its approval, but it won’t be implemented until a no-deal Brexit is avoided.
The Finance Minsiter said he believes these supports will be sufficient but if the impact is more severe than anticipated, they are prepared to use resources that would otherwise have been dedicated to the Rainy Day Fund.
He said his original intention was to transfer €500 million to the fund from the Exchequer this year, with an additional €1.5 billion being transferred from the Ireland Strategic Investment Fund.
He said the €1.5 billion will still be transferred, but he has decided not to add the €500 million from the Exchequer to the fund.
“This is the appropriate response to the more challenging economic environment we may be facing,” he said.
“It will ensure that we have in place the right supports so that our economy is protected from the impacts of Brexit and it ensures that government can continue to protect our public services in the years ahead.”
- with reporting from Gráinne Ní Aodha
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