Analysis and Prioritisation
- Department of Finance preparations
- Budget 2018 Measures
- Brexit: Analysis of Import Exposures in an EU Context – 28th March 2018
- 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
- 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
- Speech by Minister Paschal Donohoe TD on the Challenge of Brexit: Ireland, the EU and the Transatlantic Relationship – Speech at The Brookings Institute
- IFS Ireland
- SME Credit
- Update on Ireland’s International Tax Strategy
Minister Donohoe met UK Chancellor of the Exchequer, Philip Hammond on March 5th 2018
“Ireland has always been clear that we want the closest possible relationship between the EU and the UK. In this regard, we will continue to work closely with our EU partners and with the UK on ensuring a good outcome to the Brexit negotiations that sees the impact on our trade and economy minimised.”
Read Press Release here
The decision of the United Kingdom to leave the European Union presents unprecedented political, economic and diplomatic challenges for Ireland. The way in which we deal with these challenges will be a major factor in shaping the future of our island and our relationship with Britain for years to come.
As Minister for Foreign Affairs and Trade with special responsibility for Brexit, Minister Coveney has responsibility for coordinating the whole-of-Government response to Brexit. In this capacity, Minister Coveney is working closely with his colleagues across Government, with all Departments and Agencies charged with making Brexit a priority. 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 coordinated by the Department of Foreign Affairs and is 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
- The measures announced in the Budget further demonstrate the Government’s strong commitment to preparing our economy for the unprecedented challenges posed by Brexit.
- On the fiscal side the Government has continued its policy focus of enhancing the resilience of our public finance to any Brexit-related shock. Specifically, it is projected that Ireland will achieve its medium-term budgetary objective of a balanced budget next year.
- Complementing this, Budget 2018 further established the ‘Rainy Day Fund’, which provides a further counter-cyclical buffer, and represents an important measure to strengthen the economy’s shock absorption capacity.
- Budget 2018 also announced further measures to prepare Ireland’s economy for the significant challenges ahead. These measures include:
I. a new €300 million Loan Guarantee Scheme for Brexit-impacted business and a complementary €25 million Agriculture Brexit Loan Scheme – targeted at enhancing the competitiveness of the businesses most exposed to Brexit
II. a doubling of capital investment between 2015 to 2021 – boosting the growth potential of the economy;
III. and a the doubling of additional Brexit-related staff in state agencies
IV. introducing a Key Employment Engagement Programme (KEEP) – a new incentive to attract key employees;
V. and the retention of the 9% VAT rate in the hospitality sector – to reduce the impact of currency volatility in the wake of the UK’s decision;
The paper examines the sectoral import exposures of the Irish economy and other EU Member States to the UK, building on a September 2017 Department of Finance research paper analysing export exposures. Together with previous studies, this report is a further contribution that will inform the whole of Government work on contingency planning. Link to press release here.
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.
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 strength as part of the EU27 team, 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 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 partners is an important aspect of our approach. The very strong acknowledgement of our unique circumstances within the EU negotiation documents is a positive outcome, and shows that the Government’s extensive political, diplomatic campaign has been effective in ensuring understanding and recognition of our unique circumstances and specific issues.
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.
In parallel to the efforts being undertaken by individual Member States, including Ireland, the European Commission has established a dedicated Brexit Preparedness Unit. This Unit is issuing Brexit Preparedness Notices on an ongoing basis to stakeholders and economic operators across a range of different sectors.
It is important to note that these notices address a baseline scenario whereby the UK would leave the EU on 30 March 2019 without a deal on a transitional period having been agreed (i.e. a no deal, disorderly Brexit scenario). In this regard, it should be borne in mind that a transition period, extending to 31 December 2020 and based on the status quo, is currently the subject of negotiations between the EU and the UK within the context of the withdrawal process. Should this be agreed, many of the elements reflected in these notices will only become relevant at the end of the transition period.
Notices have been issued in respect of asset management, banking and payment services, insurance/reinsurance, as well for a range of other areas. A list of the notices published to date are available in the document below and the notices are available to view on the Commission’s website at the following link: European Commission Brexit Preparedness
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 2018, places a strong focus on Brexit and is fully integrated into the wider cross-Government Brexit contingency planning.
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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