Bernard Durkan (Kildare North, Fine Gael)
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132. To ask the Minister for Finance further to the recent report carried out by his Department in conjunction with the ESRI in respect of the economic impact of Brexit, the extent to which efforts are in hand to address the issues emerging with particular reference to the need to compensate for the impact on GDP; and if he will make a statement on the matter. [34359/16]

Michael Noonan (Limerick City, Fine Gael)
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The recent work carried out by my Department and the ESRI to 'Model the Medium to Long Term Potential Macroeconomic Impact of Brexit on Ireland' that was published on 7 November 2016, will be an important input to ensuring that Ireland's interests are protected in the upcoming negotiations at EU level.  Within the analysis of the paper and in line with existing international analysis, three scenarios are considered, these are:

1. a Norwegian-type solution whereby the UK becomes a member of the European Economic Area (EEA), with free trade and movement of workers

2. a scenario based on the UK agreeing a bilateral trade agreement with the EU along the lines of the EU/Swiss trade Free Trade Area agreement (FTA), where trade in services is not free and

3. a third scenario, whereby the UK and EU do not conclude a bilateral trade agreement and instead, the UK exercises its rights under the Most Favoured Nation (MFN) clause of the World Trade Organisation (WTO).

Depending on the scenario considered, the level of Irish output, a decade after the UK leaves the EU, may be between 2.3 and 3.8 per cent below a baseline of what it otherwise would have been. However the impact of the UK's exit from the EU on the Irish economy in the medium and long-term will become clearer as the trade arrangements between the UK and EU are settled. In order to take account of the issues emerging, in Budget 2017 my Department took Brexit into consideration in both its framing and its detail. In terms of framing, my Department incorporated the potential impact of Brexit into the macroeconomic forecasts for next year that underpinned Budget 2017. My Department also published an in-depth analysis of the sectors of the Irish economy and highlighted those with the greatest trade exposure to the UK. In light of the findings of the Department of Finance's in-depth sector analysis a number of taxation measures were announced in the Budget, with a view to getting Ireland "Brexit ready".

At a macroeconomic level Budget 2017 sought to build up Ireland's buffers to any fallout from Brexit. Accordingly the Government has decided to set a new domestic target of a debt to GDP ratio of 45 percent to be reached by the mid-2020s, or thereafter, depending on economic growth. This will improve Ireland ability to absorb a shock in addition to the rainy day fund announced in the Summer Economic Statement.