Bernard Durkan (Kildare North, Fine Gael)
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49. To ask the Minister for Finance the degree to which he and his Department have identified and prepared for the economic impact of Brexit; his plans to put in place measures to offset the most serious challenges presented; if he expects to have all such measures in place in time; and if he will make a statement on the matter. [50832/17]

Paschal Donohoe (Dublin Central, Fine Gael)
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The Department of Finance has been assessing and preparing for the impact of a UK exit from the European Union since well before the referendum on 23 June 2016, with this work now intensified.

The challenges which we face as a result of Brexit are mainstreamed across all divisions of my Department and are reflected in business planning. The Department’s macro-economic forecasts take into account the economic impacts of Brexit. In addition, the Department has been to the fore in producing and funding a number of Brexit-related studies, both before and since the UK's referendum decision, including;

- 'Scoping the Possible Economic Implications of Brexit on Ireland' – Scoping study of scenarios for the future relationship between the UK and the EU. Published under the Department of Finance-ESRI research programme in November 2015;

- ‘An Exposure Analysis of Sectors of the Irish Economy’. An in-depth analysis of the possible sectoral and regional impacts of Brexit arising from Ireland's trade relationship with the UK, published by Department of FinanceOctober 2016(Updated March 2017);

- 'Modelling the Medium to Long Term Potential Macroeconomic Impact of Brexit on Ireland' - Published under the Department of Finance-ESRI research programme in November 2016,which modelled the medium to long term macroeconomic impact of Brexit under a number of scenarios, including a hard Brexit whereby trade between the EU and UK reverts to WTO tariffs, and;

- ‘Trade Exposures of Sectors of the Irish Economy in a European Context’ – An analysis of trade exposure to the UK in comparison to other EU Member States, published by Department of FinanceSeptember 2017;

It is clear from the Department’s published research that the potential impact of Brexit on the Irish economy is significant. The Department of Finance preparations are ongoing and continue to examine all possible scenarios and challenges, and are a key input into the whole of Government approach.

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. 

The Government has taken a number of important steps to prepare our economy for the challenges of Brexit, including in Budgets 2017 and 2018, the Action Plan for Jobs, our Trade and Investment Strategy and the preparation of a  new 10-year Capital Plan. On the fiscal side, the Government has continued its policy focus of enhancing the resilience of our public finances to any Brexit-related shock. Specifically, it is projected that Ireland will achieve its medium-term budgetary objective of a balanced budget next year. Linked to this, over the forecast horizon, it is projected that the General Government Debt-to-GDP ratio will continue on a downward trajectory, reaching the Stability and Growth Pact (SGP) 60 per cent threshold in the early part of the next decade and continuing to improve thereafter. Whilst not complacent to potential challenges, including our currently elevated debt level, these developments will help provide fiscal capacity in the event of Brexit.  Complementing this, Budget 2018 further established the ‘Rainy Day Fund’, which provides a further counter-cyclical buffer, and represents an important measure to strengthen the shock absorption capacity of the national finances to such external risks.

Budget 2018 also announced further measures to prepare Ireland’s economy for the significant challenges ahead.  These measures include: a doubling of capital investment between 2015 to 2021 - boosting the growth potential of the economy;  improving the competitiveness of our personal tax system - through income tax reform; introducing a Key Employment Engagement Programme (KEEP) – a new incentive to attract key employees; a new €300 million Loan Guarantee Scheme for Brexit-impacted business and a complementary €25 million Agriculture Brexit Loan Scheme – targeted at enhancing the competitiveness of the businesses most exposed to Brexit; the retention of the 9% VAT rate in the hospitality sector to reduce the impact of currency volatility in the wake of the UK’s decision; and a doubling of additional Brexit-related staff in state agencies.

Additionally, the Government’s strategy to mitigate the impact of Brexit includes fully exploiting the opportunities arising.  With regard to the Financial Services sector, Brexit will provide opportunities for Ireland to increase its share of financial services based inward investment. In that regard, Minister of State Michael D’Arcy T.D. has responsibility for Financial Services, including the implementation of the IFS2020 Strategy for driving growth in the financial services sector.

The Department of Finance will continue to carry out the necessary research, analysis and consultations, and to develop policy advice in the context of Brexit.