Joan Burton (Dublin West, Labour)
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181. To ask the Minister for Finance the preparations and contingency plans his Department has put in place in the event of a British exit from the European Union; and if he will make a statement on the matter. [16353/17]

Michael Noonan (Limerick City, Fine Gael)
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The Department of Finance has been assessing and preparing for the impact of a British exit from the European Union since well before the referendum on 23 June 2016. Work was carried out in the Department to assess the potential economic and financial sector implications arising, including through the ESRI-Department of Finance research programme study published in November 2015 titled 'Scoping the Possible Economic Implications of Brexit on Ireland'. This work was undertaken within the whole-of-Government framework established by the Department of the Taoiseach.

Following the result of the UK referendum and to prepare for the forthcoming negotiations, work has been intensified across the whole of Government level including in my own Department. A Brexit Unit within the EU and International Division was established in July 2016 to oversee and coordinate this work and to act as a key liaison point with the Department of the Taoiseach, in particular. In addition, the Department of Finance staff complement in the Irish Permanent Representation to the EU in Brussels has been strengthened.  The challenges which we face as a result of Brexit is mainstreamed across all divisions of my Department and this is reflected in business planning.

As part of Budget 2017, the Department of Finance published the Economic and Fiscal outlook which presented a full macroeconomic projection including updated estimates of economic growth, the public finances and the fiscal space, taking account inter alia of the impact of Brexit. In addition, the Department published detailed analysis of sectorial exposure to Brexit across the economy.  Utilising the Department of Finance sectorial exposure analysis, Budget 2017 included a number of measures to respond to the challenges of Brexit, to mitigate future risks, and to support any opportunities that might arise. These include measures to support SMEs, entrepreneurship, agri-food and Irish exporters.

More recently, the Department has worked with the ESRI to deepen the macroeconomic analysis and a report titled 'Modelling the Medium to Long Term Potential Macroeconomic Impact of Brexit on Ireland' was published in November 2016. In April 2017, updated macroeconomic forecasts will be published by my Department, as part of the Stability Programme Update.

We know from our own published research that the potential impact on the Irish economy is significant.  It is important to recognise that the full impact of the UK's exit is only expected to materialise over time. As we cannot control the international environment, we will need to continue to improve our competitiveness, including by focussing on costs we can control, by boosting our productivity and ensuring sustainable public finances.

The best and most immediate policy under the Government's control to counter the likely negative economic impacts of Brexit is to prudently manage the public finances in order to ensure that Ireland's economy continues to remain competitive in the face of future economic headwinds. In this context, in Budget 2017, I signalled a lower debt target of 45 per cent of GDP for the mid-to-late 2020s. This will help to provide an additional fiscal 'shock absorber' capacity to the public finances to help withstand any shock including that of the impact of Brexit. It will also complement the contingency or 'rainy day' fund which will be established following the achievement of a balanced budget in 2018 and will help provide a further counter-cyclical buffer.

Separately, Brexit will provide opportunities for Ireland to increase its share of financial services based inward investment. Minister of State Eoghan Murphy T.D. has responsibility for Financial Services, including the implementation of the IFS2020 Strategy. The IFS2020 Strategy is a dynamic and evolving strategy. On January 23rd the Minister of State launched the IFS2020 Action Plan for 2017. Brexit both underpins this year's Action Plan while also featuring in individual measures to achieve the strategic priorities of IFS2020. We will continue to leverage our IFS2020 Strategy to maximise any opportunities .

The work being done by the Department will be an important input to ensuring that Ireland will be in a position to counter any negative economic impact arising from Brexit and to ensure that Ireland's interests are protected in the upcoming negotiations at EU level.  The Department will continue to monitor the economic impacts, to carry out relevant analysis and to frame budgetary policy advice in this new context.