A no-deal Brexit could cost Ireland 85,000 jobs, the Irish government has warned.
Finance Minister Paschal Donohoe said the government would need to run a budget deficit next year and economic growth would most likely be flat if the UK crashes out of the EU without a deal.
But he said if an orderly way can be found out of the impasse, the government would run a surplus of 0.4% of GDP next year and it would have 700 million euro to spend in the Budget in October once pre-committed current and capital expenditure is accounted for.
The total increase in spending next year would amount to about 2.8 billion euros.
Mr Donohoe said the government’s “first priority” is to protect the country from a hard Brexit.
“Our first priority and the priority of the government is how we can protect our country and how we can ensure that we have the resources in place that if anyone does lose their job that we have the plans in place to support their business and support them on their journey to get back to work,” he said.
“We’ve outlined that in a disorderly Brexit scenario, we believe across the early part of that, approximately 50,000-55,000 jobs will be at risk, could be lost. We want to be in a position to respond back to that.”
He added that figure would be 80,000 to 85,000 in the medium term.
Mr Donohoe published the government’s summer economic statement on Tuesday after briefing cabinet ministers on the effect of a no-deal Brexit on the Irish economy in the coming years and its budgetary impact.
It outlines two scenarios – the first involving an orderly Brexit occurring, the second involving a disorderly scenario.
The Budget is due to be unveiled on October 8, a few weeks before the UK is due to leave the EU on October 31.
“While the sensible economic and fiscal policies implemented over recent years have placed Ireland in a stronger position to deal with challenges, including Brexit, continued careful management of the economy and of the public finances is needed now more than ever in order to chart our way forward through the uncertain times ahead,” he said.
“By approaching the Summer Economic Statement in this way, we will ensure that we are prepared for all eventualities so that the public finances and our people are protected in the years to come.”
Mr Donohoe said the exact budgetary details would be ironed out in September when the Brexit scenario becomes clearer.
“At this point of time, when huge decisions need to be made in the UK regarding what they want to do it is simply too early to determine what is the exact mix of our policy response,” he said.
He added: “We’re genuinely at a fork in the road as a country from the economic point of view.”
But the minister indicated that Fine Gael’s pledge to cut taxes would still be possible even if Ireland has to deal with a disorderly Brexit.
“It’s absolutely still the case that across the lifetime of dealing with that – that tax reform and tax reduction will be possible,” he said.
“That was the case when we were dealing with our last set of economic challenges.”
He added that in the early years of a hard Brexit the government would be focused on supporting the economy and hardworking families.