Leo Varadkar (Dublin West, Fine Gael) | Oireachtas source

Before I make my statement I want to endorse what was said earlier about the death of Detective Garda Colm Horkan. The remarkable outpouring of grief we saw over the weekend says a lot about our values as a country and the respect we have for the men and women who uphold our laws. Whenever we lose a member of An Garda Síochána in the line of duty, it wounds us all and we grieve as a nation.

At the funeral, Colm's brother Brendan remembered his achievements on the sporting pitch and said he never let the jersey down. Exactly the same thing could be said about his career as a garda. He never let the uniform down. He never let us down, the people he had sworn to serve. Our condolences go to his family and friends, the people of Charlestown and the members of An Garda Síochána. Ar dheis Dé go raibh a anam dílis.

On Friday last, in lieu of a regular June European Council meeting, I participated in a videoconference of Heads of State and Government. The main focus of the discussion was the Commission's proposal of an EU-wide recovery instrument known as Next Generation EU and the EU's seven-year budget for the period from 2021 to 2027, the multi-annual financial framework, MFF. As a package, these are policies to enable our economies and societies to recover from the unprecedented challenges of the crisis caused by Covid-19 as well as the drive to the digital and green transformation of our countries and continent.

We also received a report from the President of the European Council, Mr. Charles Michel, and the President of the European Commission, Dr. Ursula von der Leyen, on the high-level conference with the UK Prime Minister, Boris Johnson, which took place on 15 June. In addition, Chancellor Angela Merkel provided an update on the implementation of the Minsk Protocol and the situation in eastern Ukraine and the occupied territories in Crimea.

The House may be interested to know that on Thursday 18 June, I joined the videoconference of the eastern partnership summit, which brings EU leaders together with our counterparts from six countries to our east: Armenia, Azerbaijan, Belarus, Georgia, Moldova and Ukraine. The meeting underpinned the strategic importance of this relationship. In her wrap-up remarks later, the Minister of State, Deputy McEntee, will provide further detail on that summit and developments in eastern Ukraine.

Friday's videoconference opened with a presentation by the President of the European Parliament, David Sassoli MEP, who expressed the European Parliament's support for an ambitious recovery fund. We were also briefed by the President of the European Central Bank, Ms Christine Lagarde, who provided us with an overview of the economic situation in the European Union. Her assessment was stark. The damage caused to the European economy by the Covid-19 crisis has been considerable and will be lasting. Her assessment is that it will take until late 2022 for the European economy to recover to pre-crisis levels. She predicted that the worst effects on our labour markets may be yet to come and are likely to affect young people and those in the private sector disproportionately.

At our last meeting in person in February, the European Council was unable to reach a consensus on the proposal for the MFF then on the table. At that time, the enormous consequences of Covid-19 for Europe were not yet known. However, in the months that have followed, the scale of the challenge we are collectively facing has become more apparent. On 23 April we agreed to task the European Commission to make a proposal for an ambitious recovery fund equal to the scale of the challenge, as well as a revised proposal for the MFF. Following that request, on 27 May the European Commission published a package for economic regeneration. This included a revised proposal for a European recovery instrument, Next Generation EU, to run over the period from 2021 to 2024, and a revised proposal for the MFF. The total package is worth €1.85 trillion in 2018 prices. That breaks down as €1.1 trillion for the MFF and €750 billion for Next Generation EU. The Commission proposed that the recovery instrument should be funded through one-off borrowing on the financial markets on behalf of the Commission as an exceptional measure in response to the unprecedented circumstances we now face. This would be achieved by temporarily lifting the own resources ceiling to 2% of EU gross national income. This additional funding would then be channelled through EU programmes and repaid over a long period of time, starting in 2028 and running until 2058.

Our discussion on Friday was the first opportunity for leaders to exchange views on these very substantial proposals. I had already set out my views in a telephone conversation with European Council President, Charles Michel, earlier in the week. On both occasions I emphasised that we welcomed the broad thrust of the proposals and the Government's support for an EU response that demonstrates solidarity with those regions and sectors most affected by the pandemic. I also emphasised the scale of the impact that the crisis has had on Ireland, our economy and our employment levels, and the need for this to be reflected properly in the assessment of needs and the related allocation key for any new funds. The metric against which grants and loans should be allocated is the extent to which a country has been impacted by Covid-19, not its past economic performance or its ability to bounce back from a crisis. On the MFF I reiterated that we were open to contributing more to the new budget but only if this protected our vital interests as a country, especially in regard to the Common Agricultural Policy, CAP. The issues which were important for Ireland before the crisis, namely, CAP, cohesion, climate, the Single Market, research and innovation, are even more important now as the country seeks to recover from an unprecedented and sudden shock to the system.

We must also use this opportunity to set Europe on the right path for the future by building a greener, fairer and more resilient, digital and sustainable European Union. As everyone in the House will agree, the CAP is an important, long-standing and well-functioning policy and a vital support to our rural communities, rural economy and farm families. Wider than that, for decades it has also assured all Europeans of a secure and affordable food supply, something we should not take for granted and something not taken for granted in other parts of the world.

Despite the increased allocation for rural development under the recovery proposal and the increased allocation for the CAP in the revised MFF, I said that what was now on the table was not acceptable to Ireland and does not yet meet the test of ensuring adequate funding into the future. Our farmers are experiencing considerable difficulties with exports and prices collapsing as a result of Covid, global disruption to trade routes, Brexit and increased competition from third countries. As we increasingly talk about Europe's resilience, we need to underpin a strong agri-food sector that will provide Europe with food security and help us to achieve our climate goals as well. A strong and properly funded CAP is needed to achieve this and we can settle for nothing less.

I also said that Brexit will affect Ireland disproportionately. Whatever the outcome of the ongoing negotiations, we will be affected more than other countries are and any recovery instruments should be designed to respond to that. It is apparent that at the end of the year, the United Kingdom will leave the period of transition now in place and begin to trade with the European Union as a third country. While I very much hope that this will be on the basis of a comprehensive free trade agreement, it will still mean a disimprovement in trading conditions for Irish exporters. Were the UK to leave the European Union - or, rather, were the UK to leave the transition - without a trade deal in place, the consequences would be especially severe for Ireland, which is the most exposed member state.

From last week's discussion, I believe leaders are committed to reaching an agreement, ideally next month, but significant differences exist and it will not be an easy task to find consensus. There are some areas of convergence. We agree that there should be an exceptional response at EU level to the Covid crisis, it should be financed through the European Commission's borrowings, the funding should be temporary and targeted at the sectors and regions most affected, and the MFF should contribute to the reform and transformation of our economies and societies. However, thinking is not yet aligned on a number of questions. One of these is whether the recovery package should provide only for loans or whether it should be a mix of grants and loans, whether it should deal only with the direct impact of Covid-19 or also pre-existing disadvantages and imbalances, whether conditions should attach to the fund and, if so, which ones, how much the fund should be, and how quickly loans should be repaid. These issues will not be easily resolved in July. None the less, we all expressed a willingness to work together in an intensified way to reach a conclusion at a meeting in person next month. In the coming weeks, President Michel will engage in consultations with all member states before tabling a revised proposal ahead of the meeting in mid-July.

While the primary focus of the meeting was the MFF and the Next Generation EU fund, Presidents von der Leyen and Michel provided a readout of the high-level conference on Brexit that took place with Prime Minister Johnson on 15 June. At that conference, they took stock of the limited progress made to date in the future partnership negotiations. In a joint statement afterwards, both sides agreed to intensify negotiations with a view to building new momentum. Both sides also confirmed their commitment to the full and timely implementation of the withdrawal agreement, including the protocol on Ireland and Northern Ireland. I thank Presidents von der Leyen and Michel and the Union's negotiator, Michel Barnier, and his team for their continued skill and measured handling of these negotiations.

I believe that a deal with the UK is still possible and I expressed my hope that an intensified engagement over the summer will reveal the landing zone for an agreement. I was among several leaders to acknowledge the importance of early and comprehensive contingency planning, given the possibility of no trade deal on the future relationship being reached. Any deal will entail significant disruption to our supply chains, business models and market access and a significant impact on the cost of doing business with the UK. We need to be wise to that. It will also impact our fishermen and seafood industry. The arrangements we have now in this regard cannot possibly be as good in the future.

I also took the opportunity to thank the leaders for their friendship and solidarity with me as Taoiseach and with Ireland as a country over the past three years, particularly when it came to Brexit. I wished them well in the difficult and challenging days ahead.

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