Ireland’s Finance Minister has confirmed that he will prepare the State’s budget for a no-deal Brexit.
Paschal Donohoe said he is making the decision to give certainty to businesses and people, to safeguard the national finances and to avoid the reversal of decisions in the future.
Mr Donohoe also ruled out cuts to income and personal taxes, adding that changes to the tax code will be “minimal”.
Speaking after briefing the Cabinet in Dublin, Mr Donohoe said: “Assuming a no-deal Brexit ensures the Government has the necessary resources at its disposal to meet the impact of this exceptional challenge whilst preserving the longer-term sustainability of the public finances.”
Mr Donohoe also said that increases will be made to social welfare payments that will target the most vulnerable.
He added: “We will have a social welfare package in the budget but it will be different in scale to previous years.
“The government will, of course, put in place the resources that are needed to support citizens at a time of change and difficulty, and to put in place the provision that may be needed to accommodate a reduced tax take due to fewer people at work.
“We will also have the provision in place to increase social welfare supports and funding due to a temporary increase in unemployment.
“We will also, in that phase of the budget, introduce timely, targeted and temporary measures for the sectors of our economy that could be, and will be, affected by a no-deal Brexit taking place.”
In what he described as a “safe and careful budget”, Mr Donohoe said it will focus on ensuring the government has the resources it needs to be ready for a shock at the end of October when the UK is due to leave the European Union.
Asked whether he will rule out tax cuts, the Finance Minister said that tax changes in next year’s budget will be “minimal”.
He added that while there are often cases and the need to make personal tax deductions, he was not going to take that decision for Budget 2020.
“For Brexit, I’m not going to do that,” he said.
“I am going to make a set of very safe choices in relation to taxation and I am confident that even with the different pressures we will have to deal through the year, that we will deliver our surplus.
“I want to ensure that we are maximising the resources that are available to help citizens, families and communities that could find themselves dealing with real change as a result of a no-deal Brexit taking place.
“I will have to make changes in our personal tax code to deal with a potential change in the minimum wage.
“There are the kinds of changes that I still want to ensure that I make but my priority is going to be making our national finances as robust as possible to ensure that if we do face a challenge in 2020 that we are best placed as possible to deal with it.”
Mr Donohoe said that while the government has committed to a budgetary package of 2.8 billion euro (£2.49 billion), it could go beyond that.
The government may have to put in place reserves to make more benefits available to those who become unemployed.
“That would have the case of moving it beyond the 2.8 billion euro framework but I’d emphasise that would only take place in the context of a no-deal scenario,” he added.
The Institute of Directors (IoD) in Ireland welcomed the Minister’s decision after its recent survey found that 89% of senior business leaders think the government should deliver a “conservative budget” in expectation of a no-deal Brexit.
The IoD is the membership body representing 3,000 directors and business leaders.
Maura Quinn, CEO of IoD, said: “Our latest director sentiment monitor survey shows that the uncertainty evident over the past 12 months has intensified in the last quarter and that business leaders’ optimism in the economy has dropped 31% year-on-year.
“The message is clear – Irish business leaders are worried and they want the Irish Government to take note and deliver accordingly in next month’s budget, which is just weeks before the current Brexit deadline.”