No-deal Brexit fund of up to €900m at centre of Budget

A fund of up to €900 million to help sectors of the economy most at risk from the effects of a no-deal Brexit is expected to be the centrepiece of next week's budget.

Minster for Finance Paschal Donohoe will outline the resources that the State will deploy to support businesses and jobs if the UK leaves the European Union without a deal.

Sources said the Brexit contingency package will be of a range between €700 million and “up to €900 million”, but will fall short by €1 billion and will be distributed in tranches.

It is understood the agri-food sector, including the exposed beef industry, will receive the largest share of the fund, followed by the business and tourism sectors.

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Mr Donohoe will have €2.8 billion to spend on budget day itself, of which €2.1 billion has already been committed, leaving €700 million available for new measures outside of the Brexit package. A number of key issues are being finalised over the weekend, such as the exact level of increase in the carbon tax. An increase of €7.50 per tonne has been pencilled in.

Impact

The pre-budget White Paper, published on Saturday, shows the impact of a no-deal Brexit on the exchequer finances. This is the basis on which the budget figures are calculated, even though the Brexit outlook remains uncertain.

On this basis, before any budget-day measures, the outlook is for the budget to be in balance next year, compared to a surplus of 0.2 per cent of GDP this year. After the budget, the Minister has indicated that a deficit of between 0.5 per cent and 1.5 per cent of GDP will be planned for 2020, taking into account normal budget measures and Brexit contingencies.

“The key theme of the budget that will be announced next week will be how the country will respond back to a no-deal Brexit if it occurs,” Mr Donohoe said. “We will be outlining next Tuesday the different supports that will be available for our economy to respond back.”

Michael McGrath, the Fianna Fáil finance spokesman, said the aim of the supports will be to help businesses through "what could be a really difficult period".

"The whole reason that we're still here is because of Brexit – it is to provide stability for Ireland at this time," he said of his party.

Corporation tax receipts

Mr Donohoe on Friday said €450 million in supplementary estimates will be needed for a number of departments – understood to be health, education and justice – and confirmed that at least some of this would be funded from higher-than-anticipated corporation tax receipts,now due to come in €800 million ahead of target. This is significantly down on the €1 billion of supplementary estimates at this time last year, he added.

He also said that he would not be putting €500 million into the State’s Rainy Day Fund this year, as had been planned, due to the possibility of a no-deal Brexit. However, a transfer of €1.5 billion from the Ireland Strategic Investment Fund to the Rainy Day Fund will go ahead, which would also be available, if needed, for Brexit measures if the impact on the economy was severe.