Tánaiste warns of a cautious ‘no-deal Brexit budget’

Today’s budget will be a ‘no-deal Brexit budget” with “modest increases” in anticipation of the “worst possible outcome” from the Brexit negotiations, the Tánaiste has warned.

Simon Coveney said the cautious approach they would take — despite an economy growing at a rate of 6% per annum and with almost full employment — was on foot of concerns that the Irish economy will grind to a halt next year should the UK crash out of Europe.

“You would expect a budget that is going to spend a lot more money... but we are going to be much more cautious than that,” he said.

“We will spend more, but it will be modest increases and we are doing that because we are anticipating the worst possible outcome from the Brexit negotiations, which is a no deal.

“And we know that in a no- deal scenario, the Irish economy will virtually stand still next year, there will be growth of about 0.7%.

We have to match increases in expenditure to economic growth, so I think the expenditure increases will be limited so that we can make space for quite a significant no-deal Brexit fund.

Asked what he thought of Michael Gove’s leaked dossier of threats to Ireland under a no-deal Brexit to use as ‘leverage’ over Dublin if talks with the EU over the UK’s departure break down, Mr Coveney said: “There’s nothing new here for us. We’ve been talking about the downside of a no-deal Brexit for many months.”

The dossier, by Mr Gove’s Brexit operations committee, warns Ireland could suffer a shortage of medicines, customs delays at the border with Northern Ireland, and a loss of access to fishing grounds off Ulster, should Britain crash out.

However, Mr Coveney said if no deal was to happen “it’ll be lose, lose, lose for the UK, for Ireland, and the EU, and that’s why we are so focused on trying to resolve differences and get a Brexit deal.”

He said British prime minister Boris Johnson’s proposal last week — to keep Northern Ireland inside the EU’s single market for industrial goods and agrifoods, but outside the EU’s customs union — was “a step in the right direction”, but there was need for “further development of that proposal in order to get a deal”. He said it “wasn’t mission impossible”.

Asked if potential financial sweeteners from Britain to help fund a border infrastructure was a runner for the Irish Government, Mr Coveney said: “This isn’t about money and if people still think it is, then they aren’t really plugged in to the Irish mindset or to the history of this island.”