No Deal Brexit poses serious threat to State finances – FF

– Budgetary position could see budgetary position deteriorate by almost €30bn over 5 years 

– National Children’s Hospital and National Broadband Plan to come out of future budgets –

Fianna Fáil Spokesperson on Finance Michael McGrath was welcomed the publication of the Summer Economic Statement but has warned that a no deal Brexit will have serious implications for Ireland’s economy and government finances.

Deputy McGrath said, „We have known for quite some time that a no deal Brexit would be disastrous for Ireland’s economy but in today’s Summer Economic Statement we see what the implications could be for the government’s finances.

„In an orderly Brexit scenario Ireland is projected to run a general government surplus of 0.4% of GDP in 2020.  However, in a no deal scenario this would deteriorate to a deficit of between 0.5% to 1.5%.  In money terms this could represent a reduction of €6.5 billion, which will no doubt have to be funded by increased borrowing from the market.

„If we look out to 2024 a no deal Brexit would worsen the budgetary position by nearly €30 billion.  These figures are stark and they underscore the importance of achieving an orderly Brexit.

„In my letter to Minister Donohoe I pressed upon him the need for Budget 2020 to be a cautionary budget, reflecting the uncertainty the country faces.  The figures in the Summer Economic Statement confirm my views.  We need the State to have the capacity to respond if a no deal Brexit comes to fruition.  We also need to be prepared to protect the vital public services that people depend on.  

Spokesperson for Public Expenditure and Reform Barry Cowen added, „Ever since the Taoiseach promised a €2.3 billion tax cut, the overspend on the National Children’s Hospital and the decision to award the preferred bidder for the National Broadband Plan I have been asking the Minister how he is going to pay for these in the years ahead.

„As I have suspected all along the Minister intends to pay for this out of future Budgets.  These are Budgets which we are told are extremely uncertain due to Brexit.  We simply do not know if we will have the capacity to pay these bills.

„In 2020 an expenditure reserve of €200 million has been set aside to pay for broadband and the children’s hospital.  From 2021 onwards, it will simply come out of the resources available for each Budget.  This is not a credible plan.

„Between 2020 and 2024 we will need an extra €1.07 billion for broadband and we could need up to €600 million for the National Children’s Hospital.  To hope that this money simply comes out of future budget allocations is fanciful.  If a no deal Brexit comes to pass, these two projects will considerably restrict our ability to effectively respond to it”, concluded Deputy Cowen.

Fianna Fáil

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