Thursday, 5 March 2020
Department of Finance
103. To ask the Minister for Finance when the stability programme update is due to be published; the prospect at this stage of no deal being reached by the EU and UK; the potential economic impacts of same; and if he will make a statement on the matter. [3752/20]
In accordance with the requirements of the European Semester, the Stability Programme Update (SPU) will be published and submitted to the European Commission by the end of April.
The EU mandate for the negotiations on the future relationship with the United Kingdom, agreed last week, sets out the EU’s clear position, based on the Political Declaration. A close, comprehensive set of arrangements underpinning a new EU-UK relationship is in all of our interests. Negotiations began between EU and UK negotiating teams this week. The work of the period ahead will be to achieve an ambitious and fair partnership that works for the benefit of all and that provides a new and strong foundation for this key relationship.
The Political Declaration envisages an ambitious trading relationship for goods on the basis of a Free Trade Agreement, but until there is greater clarity on the post-transition relationship there is likely to be continued uncertainty, particularly with respect to private sector investment.
My Department has been in contact with the ESRI on the economic impact of the Withdrawal Agreement and Political Declaration on the future relationship between the EU and the UK. I am satisfied that the existing analysis in the joint research by the Department and ESRI broadly captures the range of possible future relationships.
The analysis included a free trade agreement (of which there could be many forms), and a trading relationship under World Trade Organisation (WTO) frameworks. The impacts of these were modelled and estimated in the joint research which was published in March last year.
Under these scenarios, over the medium-term (i.e. 5 years) the level of GDP would be of the order of between 1.9 and 3.3 per cent lower, respectively, compared to a situation where the UK remains in the EU. The negative impacts will be most severely felt in those sectors with strong export ties to the UK market – such as the agri-food, manufacturing and tourism sectors and also SMEs generally – along with their suppliers. The impact will be particularly noticeable outside the main cities.
My Department will continue to monitor developments with respect to the future relationship between the EU and the UK, and will update the macroeconomic and fiscal projections to take account of any developments over the next month or so. These will be published in the SPU in April.