Michael McGrath (Cork South Central, Fianna Fail)
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6. To ask the Minister for Finance his views on the economic implications for Ireland of a potential exit by the United Kingdom from the European Union; how this impact would be mitigated; and if he will make a statement on the matter. [40355/15]

Michael McGrath (Cork South Central, Fianna Fail)
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I raise the issue of the potential exit of Britain from the European Union. Whether we think this is likely or very unlikely, we certainly need to plan for the scenario, given the implications it would inevitably have for Ireland, particularly for the free movement of people and free trade currently provided for within the European Union. It would have serious economic consequences for Ireland. The question asks what the implications are, what we are doing to plan for this potential scenario and the details surrounding it.

Michael Noonan (Limerick City, Fine Gael)
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I thank the Deputy for raising this very important issue. The Government's position on developments relating to British membership of the European Union has been clearly articulated, in particular by the Taoiseach and the Minister of Foreign Affairs and Trade; we very much want the United Kingdom to remain an integral member of the Union. This is important for both the economy and the ongoing development of the excellent bilateral relations Ireland and the United Kingdom now enjoy. Ireland is perhaps the member state that would be most affected by any change in the EU-UK relationship. We also believe the European Union is stronger and more effective with the United Kingdom as a member.

The United Kingdom's continued membership of the European Union is, therefore, a matter of strategic importance for the Government. In this regard, Departments, including my own, have been working on the matter for some time. Under the Department of Finance and Economic and Social Research Institute, ESRI, research programme agreement, my Department commissioned research to be undertaken on scoping the potential economic implications for Ireland of a change in the EU-UK relationship. The research was published on 5 November and is an important contribution in deepening our understanding of the potential issues arising. Although the research was commissioned under the Department of Finance and ESRI research programme agreement, it is important to underline that the ESRI is an independent institution.

My Department and others are continuing our assessment of all the issues involved in protecting Ireland's economic interests. However, I emphasise that the main focus of our work is now on examining how to support UK membership of the European Union rather than planning for its withdrawal. In this context, the Deputy will be aware of the publication of the Prime Minister, Mr. Cameron's letter to the President of the European Council on 10 November, in which he sets out in broad terms the changes that the United Kingdom intends to seek in the renegotiation of its membership of the European Union. We are entering a phase of discussions at European Union level leading up to the December European Council. Ireland will be very engaged both at political and official level.

Michael McGrath (Cork South Central, Fianna Fail)
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I agree with the Minister's assertion that we need to be actively involved in the process under way between the British Government and the European Union. We should be doing so on the basis that we are actively working towards keeping Britain in the European Union. The reality is we are economically interdependent and our interests are inextricably linked. That is borne out by the trade relationship between Ireland and the United Kingdom. Having said that, we also have a duty to plan for the other scenario of a Brexit which may not be likely but is a possibility. Given the significant issues raised in the ESRI's report in terms of trade, foreign direct investment, energy security and migration implications, we need to actively consider what measures Ireland would need to implement if the scenario was to come to pass. I sincerely hope it will not happen, but my question is whether we are working with the scenario of a Brexit in mind. It is fundamentally in our interests to be prepared should it happen.

Michael Noonan (Limerick City, Fine Gael)
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The primary work being done in the Departments of the Taoiseach and Foreign Affairs and Trade is to develop a constructive role for Ireland to assist the United Kingdom in retaining membership of the European Union. As we move towards the Council meeting in December, the Government is considering how it can contribute constructively to the negotiations, working with EU partners to reach pragmatic solutions, while at the same time protecting the economic interests of Ireland. We have not yet had any real discussion on the scenario that none of us wants, that of a British exit. That would happen in a subsequent phase. I would be very surprised if it was an exit simpliciterrather than a change in the relationship between the United Kingdom and the European Union. The nature of what would replace that relationship would decide whether this would be a big problem for Ireland or not as the case may be. There are precedents; Norway has such an agreement.

Michael McGrath (Cork South Central, Fianna Fail)
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I agree the more likely scenario is a changed relationship between Britain and the European Union and that an accommodation will be reached. Ireland must be actively engaged in that process at European Council level, supporting the position of the British Government where we believe it is in our interests to do so. We may not agree with it on all of the issues being raised, but our overarching objective must be reaching an overall accommodation that will allow Britain to remain within the European Union. The alternative simply does not bear thinking about, as it may involve the reintroduction of tariffs and the need to immediately negotiate a bilateral trade arrangement between Ireland and the United Kingdom. That is not a space into which we want to go. We have a direct land border with part of the United Kingdom in the Six Counties. The issue is fundamental to our future economic interests and the ESRI's report makes a very important contribution to the debate. It highlights the key issues that need to be addressed. I support the Government's position in engaging constructively in the process, with a view to reaching an overall arrangement. I implore the Minister to ensure that, in the background, officials will work on the Brexit scenario.

Michael Noonan (Limerick City, Fine Gael)
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I thank the Deputy for his support and agree with him on the position he outlined, which is helpful and constructive. With regard to the renegotiation by the United Kingdom of its relationship with the European Union and the capacity of Ireland to be of assistance with pragmatic and constructive proposals, rather than looking at it as the United Kingdom trying to have separate and distinct arrangements for itself, we can see it as the United Kingdom trying to make changes in the European Union to the benefit of the whole Community. If we approach it from that perspective, there is a better chance of securing a positive result. I can envisage a case where the United Kingdom will advocate change, arguing that such changes would benefit all member countries of the Community, and will be accommodated in that space. That is opposed to the United Kingdom stating it is different and needs a separate deal. That is not a workable solution.

Michael Kitt (Galway East, Fianna Fail)
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The Deputy who tabled Question No. 7 is not present.