Ireland’s finance minister presented a ‘Brexit-proof’ budget on Tuesday, including a 1.5 billion euro ($1.7 billion) ‘rainy day fund’ in case Britain’s divorce from the EU sends economic shockwaves through the country.
The fund would be supplemented by 500 million euros annually, starting in 2019, under the budget proposed by minister Paschal Donohoe – which is the last before the scheduled Brexit date of March 29, 2019.
‘Our ability to withstand economic shocks needs to be stronger,’ he said.
‘This is why I am establishing the rainy day fund to increase the state’s resilience to larger economic shocks.’
Donohoe also admitted that the prospect of a no-deal Brexit had been factored into the budget outlined to parliament.
Britain and the EU are hoping to reach a deal over trade ties and the Irish border, where disruptive controls will be instated unless compromise is reached.
Other budget measures to address Brexit include a 110-million euro fund for steps such as ‘essential customs requirements’.
A loan scheme to provide up to 300 million euros for small- and medium-sized enterprises and the agriculture and food sector was also announced.
‘This budget is very much Brexit-proof,’ said Prime Minister Leo Varadkar in a video.
‘First of all it’s balanced, which means that if we do have to borrow as a result of a difficult Brexit, we’ll have the capacity to do so.
‘We’ll also establish a rainy day fund which we’ll be able to dip into if we’ve a difficult Brexit and we need to do things to help out business and farmers, for example.’
Foreign minister Simon Coveney said that some of the investments ‘we hope will be wasted money.
‘Because we hope we’ll be able to negotiate an outcome that of course doesn’t require a lot of these checks or infrastructure,’ he told reporters.
‘The future relationship that Ireland wants is the closest possible relationship with Britain.’
The budget is likely to pass. Varadkar’s minority Fine Gael government has a working majority through a coalition with independent lawmakers, as well as a confidence and supply agreement with the country’s second largest party Fianna Fail.
The agreement commits Fianna Fail to backing three government budgets – of which this will be the last – but expires at the end of 2018.
Varadkar is keen to extend the deal and avoid an election until 2020, to steady the helm as Brexit unfolds.
But Fianna Fail leader Micheal Martin has indicated talks to renegotiate the accord will begin only once the budget has been announced. That means Tuesday’s announcement could mark the beginning of a power shift in the country.