No-deal Brexit threatens to push Ireland into budgetary deficit

A no-deal Brexit threatens to push Ireland into a budgetary deficit, Tánaiste Simon Coveney has warned.

Mr Coveney said the economy would feel the effects of a UK crash out on March 29th because the Government would have to borrow money to fund and protect vulnerable sectors.

Mr Coveney made the comments during an Oireachtas committee meeting on Thursday on the implementation of the Belfast Agreement.

“Nobody should pretend that we can have such a comprehensive contingency plan in place that a no-deal Brexit can be managed easily,” he said. “It’s nonsense. It will have an impact on our economic growth. It will have an impact on jobs . . . we will probably have to operate on the basis of a deficit again for another year or two rather than surplus. Because undoubtedly we may have to borrow money to fund and protect vulnerable sectors.”

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The State recorded a budget surplus in excess of €100 million last year for the first time since the financial crisis.

Mr Coveney described the possibility of Britain imposing tariffs on Irish products post-Brexit as “crazy”.

He said the possibility of milk that’s produced in Northern Ireland but is processed in the Republic being subject to a potential tariff of about 40 per cent would be a bad situation for everyone involved. About 40 per cent of milk produced in Northern Ireland is processed south of the border.

“It would be crazy and we can’t allow it to happen,” he said. “I don’t believe it will happen but we don’t control all the levers.”

Mr Coveney added that this was one of the reasons they were planning for a worst-case scenario. The Government intends to publish its no-deal Brexit legislation on Friday.

The committee heard the Tánaiste reiterate that the best and only way to ensure an orderly withdrawal of the UK from the EU is to ratify the withdrawal agreement.

He said the Irish government remained convinced the backstop is absolutely necessary, adding that at present there was “no credible” alternative arrangement being put forward by the UK Government.

The backstop is a position of last resort, to protect an open Border in the event that the UK leaves the EU without an overall exit arrangement. Thousands of people traverse the Border daily as goods and services pass without restriction.

“We have to try and find a way to provide the reassurance that many in the British parliament in Westminster are seeking before they can ratify this deal,” said Mr Coveney.

Juncker far from optimistic

Earlier, European Commission president Jean-Claude Juncker said he was “not very optimistic” about the chances of Britain leaving the EU with a deal next month. He confessed to “something like Brexit fatigue”.

“Brexit is deconstruction; it’s not construction,” said Mr Juncker, who met British prime minister Theresa May on Wednesday.

His remarks came as Brexit secretary Stephen Barclay and attorney general Geoffrey Cox met EU negotiator Michel Barnier in Brussels on Thursday. Following talks the British team said the focus of negotiations is now on getting new guarantees on the temporary nature of the backstop.

Meanwhile, Democratic Unionist Party deputy leader Nigel Dodds said the European Union is seeking to close down options for ending the Brexit impasse.

“It seems some within Europe have chosen to close down options rather than engage in positive and pragmatic negotiations,” said Mr Dodds .