A no-deal Brexit would “fundamentally change” the economic relationship between Ireland and Britain, warns Finance Minister Paschal Donohoe.
After meeting with his British counterpart, Mr Donohoe said there is a growing and material risk of a no-deal Brexit which the British government is “willing to contemplate”.
Mr Donohoe said his meeting with new chancellor of the exchequer Sajid Javid in London was “productive” but that there was a significant divergence of views on the withdrawal agreement.
“Most of our discussion was around how we would avoid a hard border and how we would avoid a hard border the consequence of a hard border on the island of Ireland and what a hard border would mean for Northern Ireland,” he said.
He said this is an area of “really important divergence” between both sides.
“From our point of view, we believe the most effective way of ensuring that we do not have a return to a hard border is the ratification of the withdrawal agreement, including the backstop,” said Mr Donohoe. “The chancellor outlined his views regarding why he did not believe the backstop could play a part in a future withdrawal agreement.”
He said that if Britain leaves the EU without a deal and became ‘a third country’ (the EU has ties with a number of nations that are not formally part of the EU), it would have “a fundamental effect on the nature of the economic relationship” between Britain and Ireland.
“Obviously, they would be outside the single market, they would be outside the customs unions, and they would be treated like other countries that are outside of the European Union from a trading point of view,” said Mr Donohoe.
Asked if the British government is using the threat of a crash-out as a bargaining tool in talks with the EU, Mr Donohoe said prime minister Boris Johnson and his ministers are “willing to contemplate” a no-deal.
“My view is it’s not their desired outcome, my view is that they do want to find ways to avoid a no-deal Brexit taking place but it is also something that they are willing to contemplate,” he said. “I think Prime Minister Johnson has made it very clear that a no-deal Brexit is something that he is willing to contemplate and this is something that the chancellor has acknowledged in public and it’s something that he did discuss with me. It is a risk that is growing and it is a risk that is material.”
Mr Donohoe also emphasised the importance of keeping in contact with his British counterpart.
“Even in a no-deal Brexit with all of the challenges that will bring, I will remain focused and I know all will on how we can have the best possible relationship with the United Kingdom and protect the shared asset that we have of friendship between both countries,” he said.