Bernard Durkan (Kildare North, Fine Gael)
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98. To ask the Minister for Finance the extent to which economic initiatives are likely to arise in the event of unforeseen impacts from Brexit; and if he will make a statement on the matter. [46879/19]

Paschal Donohoe (Dublin Central, Fine Gael)
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Since the result of the UK referendum in 2016, Brexit has been embedded in all of the Government’s economic decision-making, and in the management of our economy. At all times the Government has sought to protect our citizens and support the economy, enterprise and jobs. Dedicated measures were announced in Budgets 2017, 2018 and 2019 including up to €600 million that has been made available through the Future Growth Loan Scheme and Brexit Loan Scheme. This is already helping our businesses to mitigate the risks of Brexit.

Budget 2020 builds on these preparations.  Budget 2020, including the macroeconomic and fiscal outlook which underpins it, was based on the sensible assumption that the UK would leave the EU on 31 October without an agreement. Budget 2020 involves a ‘twin-track’ approach, namely:

- Funding services and making progress on particular policy areas, and;

- Supporting sectors and regions most exposed to Brexit-related disruption.

In the event of a disorderly exit from the EU by the United Kingdom, certain sectors of our economy would be impacted more severely than others. In particular, indigenous enterprise and agriculture are likely to be the hardest hit, given our close trading relationship with the UK and the expected increase in tariffs.

To mitigate against this, in addition to allowing the public finances to absorb the shock, the Budget set out a number of temporary, targeted support measures of over €1.2 billion that could be triggered to ensure that that our economy will be protected in as far as is possible from the risks of a no deal Brexit. This is on top of existing grants and loans which are already available for business and agriculture, and is in addition to ongoing Government expenditure on Brexit preparedness.

Assuming a no-deal Brexit ensures that the Government will have the necessary resources at its disposal to address this challenge, whilst preserving the longer-term sustainability of the public finances and safeguarding the hard won progress of recent years in stabilising the public finances.

The Government’s focus is to protect our economic and financial interests, and to minimise the disruption to the Irish economy to the greatest extent possible. The best way we can mitigate against the risks posed by Brexit is through sensible budgetary policy, careful management of the public finances and by focusing on competitiveness-oriented policies. The Government will continue to work to strengthen the resilience of the economy, to maximise opportunities and to prepare for the challenges of Brexit.

Bernard Durkan (Kildare North, Fine Gael)
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99. To ask the Minister for Finance the extent to which his Department continues to identify and monitor weaknesses in the economy likely to be exploited by other events outside his control in the aftermath of Brexit; and if he will make a statement on the matter. [46881/19]

Paschal Donohoe (Dublin Central, Fine Gael)
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My Department continuously identifies and monitors possible risks to, and weaknesses in, the Irish economy, most of which are currently external in nature.

In the Budget 2020 Economic and Fiscal Outlook, four key external risks were identified. Firstly, there is a possibility that the slowdown in global growth will become more prolonged, despite the initial expectation of the slowdown being temporary. Secondly, continued and increasing geopolitical uncertainty has the potential to disrupt growth in key regions and generate headwinds for output and employment in Ireland.

Thirdly, an increase in protectionism, including increased tariffs on EU-US trade, could have a detrimental impact on living standards. Given Ireland’s position as a small open economy with a high degree of integration in global value chains, any further disruption to trade or a slowdown in global growth would have a disproportionate impact on the Irish economy.

The fourth external risk identified is the potential for the outcome of Brexit to be more severe than initially estimated, notwithstanding the assumption of a no-deal Brexit in the baseline forecasts. On the other hand, there is the increasing possibility of the UK leaving the EU with a withdrawal agreement which represents an upside risk.

A useful tool used by my Department to monitor global developments is the economic policy uncertainty index. The global index and the Ireland-specific index are currently at all-time highs, reflecting the challenges currently faced by the global and Irish economies.

As these external challenges are largely beyond our control, the best way we can mitigate against them is through prudent budgetary policy, careful management of the public finances and by focusing on competitiveness-oriented policies. That is what this Government has done and will continue to do.