Irish Government Unveils Brexit Budget
The Irish Government has announced the full details of its 2020 Budget, the details of which, according to the Minister for Fiance, Pascal Donohue, were finalised on the assumption of a no-deal Brexit.
The country’s tax-paying public are likely to be disappointed by the details of the Budget which leaves tax rates relatively untouched.
Foremost in the minds of Government when preparing the Budget appears to have been Brexit-readiness and the provision of an emergency fund, should the UK crash out of Europe with no-deal.
In his Budget statement, Minister Donohue said, ‘In preparing for No Deal, we can ensure that the Government has the necessary resources at its disposal to meet the impact of Brexit, while keeping our public finances on the credible and sustainable path they have been on since 2011.
Our responsible management of the public finances means that we will meet the challenge of a No Deal Brexit from a position of strength.
This year we have eliminated the deficit and are projecting a surplus of 0.2 per cent of GDP.
In the event that the UK leaves the EU with an agreement, we will continue to build on this surplus.
And in the event of a No Deal, we will intervene in a sustained and meaningful way to support jobs and the economy.’
There are to be no changes in income tax bands, tax credits or social insurance payments. The amounts paid in child benefit and the state pension will also remain the same for 2020.
A range of measures aimed at assisting the economy in the event of a no-deal Brexit were announced.
Should that happen, €650 million will be made available for the Agriculture, Enterprise and Tourism sectors. €220 million of this will be deployed immediately in the event on a no-deal.
A list of funding that will be made available by way of grants, loans and equity investments was also announced.
The Minister also said that in the event of a no-deal being more severe than allowed for in his Budget, he will be prepared to use funds that would otherwise have been dedicated to Ireland’s ‘Rainy Day Fund.’
The Rainy Day Fund was established by the Irish Government in 2018, as a means to offset any future economic shocks.
The fund, debated at length in the years following the economic collapse which obliterated Ireland’s economy, resulting in a bail-out, was established in 2018.
The Minister said, ‘Given the small size and openness of the Irish economy, the use of this type of funding is an important way to protect the economy in more challenging times.
My original intention was to transfer €500 million to the Rainy Day Fund from the Exchequer this year, with an additional €1.5 billion being transferred from the Ireland Strategic Investment Fund.
While I am committing that this €1.5 billion will be transferred to the Rainy Day Fund, given that a No Deal Brexit is more likely, I have decided not to transfer the additional €500 million from the Exchequer this year.
This is the appropriate response to the more challenging economic environment we may be facing.’
It looks as though the country’s Rainy Day Find may be under threat before it gets off the ground.