Belfast Telegraph

No-deal Brexit ‘the central assumption’ as Ireland unveils budget

Paschal Donohoe set aside funds to cushion the blow of the UK’s departure from the EU.

Finance Minister Pascal Donohoe (Niall Carson/PA)
Finance Minister Pascal Donohoe (Niall Carson/PA)

By PA Reporters

The Irish Government has insisted it stands ready to absorb the impact of a no-deal Brexit as it unveiled a budget with a 1.2 billion euro fund to help weather the storm.

The package, the majority of which will only be drawn down if the UK leaves the EU without an agreement, includes 650 million euro to support the agri-food and tourism sectors.

There will be 200 million euro made available to government departments immediately, deal or no deal, to increase staffing levels and upgrade airports and ports.

The Government will need to increase borrowing to fund the support package, much of which will be spent in the form of loans, grants and capital funding.

Finance Minister Paschal Donohoe said the budget was “without precedent”.

“This is a budget developed in the shadow of Brexit and the context for Brexit has shifted to no deal as our central assumption, this does not mean no deal is inevitable, but equally we stand ready if it does happen,” he told the Dail parliament in Dublin.

“In preparing for no deal we can ensure the Government has the necessary resources to meet the impact of Brexit, keeping our public finances on the credible path they have been on since 2011.

“We must increase the level and range of supports to ensure our economy is protected and this is why we are announcing over 1.2 billion euro, excluding EU funding, to respond to Brexit.”

The spending plan is based on the anticipated gloomy financial outlook if the UK leaves with EU without an agreement on October 31.

“A no deal is unpredictable,” said the minister.

“It will impact different sectors in different ways.

“Our response will demand flexibility.”

The budget also included measures to tackle climate change, including a six euro per tonne hike in carbon tax.

As part of the Brexit pot, 365 million euro is also being provided for extra Social Protection expenditure linked to a no deal, while 45 million euro will provide increased supports for workers in adversely affected parts of the country, such as the border region.

On climate change, Mr Donohoe described it as the “defining challenge of our generation”.

He said carbon tax would be increased from 20 euro to 80 euro per tonne by 2030, raising an additional six billion euro.

It will be raised by six euro from midnight on Tuesday, raising 90 million euro in 2020, and will be ringfenced to fund new climate action measures.

The move will see the price of petrol and diesel rise at midnight with the cost of home heating fuel increasing in May next year.

Part of the funding will be spent helping communities involved in the extraction of peat in the Irish Midlands, as the Government tries to move away from reliance on fossil fuels.

The price of a packet of 20 cigarettes is to go up by 50c from midnight.

The social welfare package will increase by 690 million euro next year.

The help-to-buy scheme has been extended in its current form for another two years to the end of 2021.

To date, some 15,000 new homes have been purchased or built by first-time buyers under the scheme.

Mr Donohoe said a further 20 million euro will be spent on homeless services which will bring the total funding to 166 million euro in 2020.

He said this will support people in emergency accommodation and increase preventative measures, long-term support and day services.

A further 1.1 billion euro of capital funding will be allocated to social housing to support the building of over 11,000 new social homes next year.

Mr Donohoe said that 12,000 units will be “delivered” in 2021.

An additional 80 million euro will go to the Housing Assistance Payment scheme.

The department of Children will be allocated an additional 94 million euro in 2020.

The allocation for Tusla, the child and family agency, will be over 184 million euro to support the reduction of the number of children to social worker ratio, and address cost pressures in private residential and foster care.

The police force in Ireland will see its budget increased by 81 million euro in 2020, a 4.7% increase.

This will deliver up to 700 new Garda recruits, and extra civilian staff to allow for more frontline policing.

Health expenditure is set to increase by 6.3% to 17.4 billion euro next year.

The income threshold for access to free health care through a medical card will increase by 50 euro for one person or 150 euro for a couple. This will benefit up to 56,000 people.

Free GP care is to be expanded to children under the age of eight and free dental care for children under the age of six.

Fuel allowance will increase by two euro a week.

Mr Donohoe said he could not commit to widespread tax cuts.

“Turning to our taxation system, I will not commit to across-the-board personal tax cuts at this time of economic uncertainty as to do so could potentially undermine the sustainability of our public finances,” he said.

“The unfunded tax cut of today is the unwelcome tax increase of tomorrow.”

Mr Donohoe confirmed the payment of a 100% Christmas bonus to all social welfare recipients in 2019.

The Living Alone allowance will increase by five euro while the One Parent Family payment will go up by 15 euro.

“The social welfare allocation I am announcing today is more moderate and targeted,” Mr Donohoe said.

He said he was providing 13 million euro for the Warmer Homes scheme to provide free energy efficiency upgrades to households deemed to be or at risk of energy poverty.

Concluding his budget speech, Mr Donohoe said: “Brexit is a great challenge. But our country will grow and our economy will develop.

“Budget 2020 aims to make progress on much, at a time of risk, but also at a time of opportunity.

“It aims to further improve our national finances while the demands on public spending are so many.

“It marks a necessary step in our response to climate change while conscious of the needs and difficulties that this step creates.

“And it does all this while continuing to get our economy ready for Brexit.”

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