Analysis and Prioritisation
- Department of Finance preparations
- UK EU Exit: Trade Exposures of Sectors of the Irish Economy in a European Context – 13th September 2017
- UK EU EXIT – An Exposure Analysis of Sectors of the Irish Economy – March 2017
- Modelling the Medium to Long Term Potential Macroeconomic Impact of Brexit on Ireland – November 2016
- Getting Ireland Brexit Ready – October 2016
- Scoping the Possible Economic Implications of Brexit on Ireland – November 2015
Programme of Engagement
- Speech by Minister Paschal Donohoe TD to the Dublin Chamber of Commerce Session of the Magill Summer School – July 2017
- IFS Ireland
- SME Credit
- Update on Ireland’s International Tax Strategy
Minister Donohoe met UK Chancellor of the Exchequer, Philip Hammond on July 14th 2017
“Ireland’s membership of the EU remains central to our interests and we are keen that the future relationship between the EU and the UK is as close and positive as possible. Ireland is part of the EU 27 team for the negotiations and prepared to work hard to achieve the best possible outcome for all. The Irish Government’s headline priorities remain the economy, the protection of peace in Northern Ireland, maintaining the Common Travel Area and the future of the European Union. We note the constructive beginning to negotiations and are hopeful that the cooperative approach will be maintained throughout the process”.
Read Press Release here
Listen to Minister Donohoe’s recent interview with Bloomberg.
Ireland has been preparing for Brexit for a long time. We are ready for what is ahead. All Departments and Agencies have been charged with making Brexit a priority, with strong co-ordination at key levels across Government. To read more about the Government’s preparations on Brexit, check out this dedicated section on the Government’s News Site. There you can sign up to receive regular email updates on the latest Government developments regarding Brexit.
Ahead of the commencement of the Article 50 negotiations on 19 June, the Government publishedy a comprehensive document on Ireland and the negotiations on the UK’s withdrawal from the European Union under Article 50 of the Treaty on European Union. This document reflects the findings and outcomes of the extensive preparatory work and consultations undertaken to date and demonstrates how these will be brought to bear in Ireland’s approach to the negotiations in the weeks and months ahead.
The Department of Finance has been assessing and preparing for the impact of Brexit since well before the referendum on 23 June 2016, with this work now intensified. The primary areas for the Department of Finance relate to the economic and financial sector implications stemming from Brexit. This work is being undertaken within the whole-of-Government framework established by the Taoiseach and will be an important input to ensuring Ireland’s interests are protected throughout the negotiation process and in terms of minimising any adverse impacts on our economy.
Internally the Department of Finance undertakes rolling analysis which focusses on the key policy issues arising for the Department:
- Macroeconomic impact
- Financial Stability issues
- EU financial services policy
- Irish financial services sector
- EU Budget
UK EU Exit: Trade Exposures of Sectors of the Irish Economy in a European Context – 13th September 2017
This paper examines how exposed traded sectors of the Irish economy and other European Union (EU) member states are to the United Kingdom in light of Brexit. The paper also compares Ireland’s revealed comparative advantage at the sectoral level, to show the most specialised sectors in Ireland relative to the rest of the world, and how Brexit may affect these.
This paper examines the trade exposures of sectors of the Irish economy to the UK in light of the United Kingdom’s decision to exit the European Union.
The research in this paper is motivated by a desire to better understand which sectors of Ireland’s economy are most exposed to the UK’s departure from the EU.
Note: This paper is an update of a previous version of the paper that was published with Budget 2017 on 11 October 2016. Following publication of the October 2016 version, the CSO released updated data which is now included in the revised paper.
Modelling the Medium to Long Term Potential Macroeconomic Impact of Brexit on Ireland – November 2016
This research was conducted under the joint Department of Finance and ESRI Research Programme on The Macroeconomy and Taxation, and examines the potential medium to long term implications of Brexit under a range of scenarios.
Looking at the effect ten years after a UK exit, a WTO scenario results in the level of GDP being 3.8 per cent below what it otherwise would have been in a no-Brexit scenario; the bulk of the impact occurs in the first five years. As a result, the level of employment is 2 per cent below what it would otherwise have been, with the unemployment rate nearly 2 percentage points higher. The most severe scenario indicates that the Irish economy will be more severely impacted than the UK economy.
This paper provides an overview of:
- The impact Brexit may impact have on the Irish economy, and it identifies the sectors that are most exposed to the UK in terms of trade links and describes their key characteristics.
- The policy responses to Brexit that were been introduced in Budget 2017 to enable exposed sectors of Ireland’s economy to remain competitive, and to protect the public finances from Brexit related shocks.
In Budget 2017, the Minister for Finance introduced a number of measures to help get Ireland Brexit ready:
Retention of the 9 per cent VAT rate for the hospitality sector
Foreign Earnings Deduction extended until 2020
Extension of SARP until 2020
€400 increase in earned income tax credit
Rainy day fund and
New debt-GDP target by the mid-part of the next decade.
Budget 2017 is just the start, more measures will be implemented as the EU UK negotiations develop over the two years after Article 50 is invoked.
In advance of the referendum under the joint Department of Finance/ ESRI research programme, an initial scoping study on the potential implications of Brexit was undertaken. The purpose of this study was to:
- Describe and quantify the key economic linkages which have developed over time between Ireland and the UK in the context of EU membership, and
- Make an initial assessment of the risks and opportunities to these economic linkages in the context of potential future developments at EU-level, in particular a UK exit from the EU.
The main findings of the paper relate to the implications Brexit may have for:
Foreign Direct Investment
Energy in Ireland, the UK and NI
Migration across Ireland and the UK
In the negotiations, Ireland will negotiate from a position of one of the 27 Member States, and will work to ensure that the negotiations are conducted in a positive and constructive way. Regarding Ireland’s membership of the EU, we are clear that our interests are best served within the European Union, and that Ireland remains committed to shaping and influencing the direction of the Union for the times ahead.
A critical part of the Government’s strategy and preparations for the negotiations has been to ensure that our priorities and unique concerns are heard and understood across Europe, and therefore engagement with EU institutions and our EU and UK partners is an important aspect. In that regard, the Government continues to engage politically at an EU level in order to ensure that Ireland’s interests are kept to the forefront as much as possible during the negotiation period ahead.
For example, Minister Donohoe meets his EU counterparts at Council meetings as well as undertaking other bilateral meetings. This work is supported by an extensive diplomatic effort across the EU to emphasise Ireland’s concerns and to ensure that they are fully reflected in the EU position.
What has happened so far?
We also have long-established connections to London and Belfast, mainly through the Good Friday Agreement. Maintaining the strength of the relationship between Ireland and the UK continues to be a priority for both countries not least in the context of the economy and trade where it is clear that our concerns align with the UK objective of having a close economic and trading relationship with the EU. This entails regular contact between the two Finance Ministers. Following the publication by Prime Minister May of the Article 50 letter to President Tusk, Minister Noonan held a telephone call with his counterpart the Chancellor of the Exchequer of the United Kingdom, Mr. Philip Hammond. More recently Minister Donohoe met with the Chancellor during a trip to London. Minister Donohoe and Chancellor Hammond also meet regularly at meetings of EU finance Ministers.
Speech by Minister Paschal Donohoe TD to the Dublin Chamber of Commerce Session of the Magill Summer School, Glenties, Co Donegal – July 2017
Where Brexit presents potential opportunities, we will of course seek to maximise these. In relation to international financial services (IFS), Minister of State Michael D’Arcy T.D. has responsibility for the implementation of our IFS2020 Strategy. We will continue to leverage the IFS2020 Strategy in order to maximise potential opportunities in the IFS sector. The latest iteration of the Strategy, the IFS2020 Action Plan 2017, places a strong focus on Brexit and is fully integrated into the wider cross-Government Brexit contingency planning.
The European Banking Authority
Arising from Brexit, the European Banking Authority (EBA) must relocate from London to another EU location. On 31 July, the Department submitted Ireland’s formal offer to host the EBA in Dublin.
Ireland’s formal offer document outlines how Dublin meets the objective criteria that have been set out by the European Council and Commission, and highlights how a relocation to Dublin would be the least disruptive move for the EBA and its staff.
Minister of State with special responsibility for Financial Services and Insurance, Michael D’Arcy stated:
“The fact that the United Kingdom has decided to leave the European Union has resulted in significant disruption and uncertainty. For the EBA, its staff and their families, a move to Dublin is the least disruptive option. Our transport links to Europe, our culture, language and skilled multilingual education workforce make Dublin an attractive destination ahead of other potential locations. Given the economic and strategic benefits for Ireland, we are making a strong proposal which includes incentives to support the relocation of the EBA and the establishment of a Relocation Group to aid the relocation of the Authority.
The EBA relocation to Dublin would be positive strategically and symbolically; having such a prestigious EU agency here would further raise our profile as global leaders in the financial services sector and demonstrate our position as a destination of choice for international companies seeking a location within the European Union. I strongly believe that Dublin is a strong contender for the relocation and is the best choice for Europe.”
A final decision will be made in November 2017 on the relocation of the EBA from its current site in London.
The challenges posed by Brexit make the current range of Government supports, set out in in our SME credit section Government supports for SME Credit, even more vital. State backed, appropriately priced, flexible credit can assist SMEs to restructure their cost bases and re-price their products and services so that they can continue trading with the UK in the weaker Sterling environment. Loans made to SMEs, on the basis of viable business plans, can also give them the opportunity to diversify into other markets and reduce their exposure to the UK.
Brexit, and the changing relationship between the United Kingdom and the European Union, is a significant factor when considering Ireland’s competitive position for attracting investment and jobs.
A number of taxation measures have been announced in Budget 2017 with a view to getting Ireland “Brexit ready”.
Ireland has committed to the BEPS process and will play its full part in implementation and we remain a leading supporter of international efforts to increase transparency in the area of corporation tax.
Ireland’s International Tax Strategy sets out a Charter with the principles and objectives underlying Ireland’s international tax policy.
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