Budget 2019: Coveney hopes €700m Brexit package won’t be needed

Simon Coveney summed up the chaos that is Brexit and how it might fall out when he said he hoped the €700 million-plus package of supports announced in Budget 2019 to protect against it would be wasted.

The point the Tánaiste and Minister for Foreign Affairs was making was that the Government was working for the best possible post-Brexit relationship with the UK in negotiations, with the hope that the suite of measures, including customs training and east-west border inspectors, would not be required.

“The irony of all this, by the way, is that we are going to be investing a lot of money in a whole series of things that we hope will be wasted money because we hope that we will be able to negotiate an outcome that of course doesn’t require a lot of these checks of infrastructure in future,” he told reporters.

The Brexit-heavy budget speech of Minister for Finance Paschal Donohoe shows the concern the Government has about the 'known unknowns' around Brexit: how the UK's departure from the EU will hurt its closest trading partner and the potential disruption in trade between the two islands after March 2019.

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The Government has attempted to Brexit-proof the public finances in this budget. Not only is there a range of measures aimed at preparing for the highly probable scenario that the UK will be outside EU economic rules beyond the 21-month transition period, but the Government is also getting ready for a scenario where Britain could crash out without a deal.

The €700 million-plus worth of measures can be best seen as preparation for Brexit; there is then the possibility of accessing the €2 billion Rainy Day Fund, set up in this budget, as a contingency should there be a disorderly Brexit.

Challenge of our generation

Donohoe called the UK’s departure from the EU “the political, economic and diplomatic challenge of our generation” and, as Coveney pointed out, it almost got a mention in every page of his 22-page budget speech to the Dáil.

The Minister for Finance said necessary Brexit-proof measures were designed for a “central case” - expect to hear this phrase more often - of there being a EU-UK deal. But he stressed that a no-deal Brexit had “influenced decisions.” This explains the bigger-ticket Rainy Day Fund initiative, for example.

The fact that the Brexit budget package covers spending in various Government departments and State agencies, from the Department of Business to Agriculture to the HSE to the IDA and Enterprise Ireland, shows how wide the Government is designing the Brexit fallout shelter.

Most of the focus geographically is on the area that will be most affected, the Border region, and those who will be most affected: the businesses in the agri-food and exporting sectors and the customs inspectors that look eastwards to the UK and who will have to monitor trade with Britain more closely.

Millions of euro is being allocated to the IDA to fund regional properties including facilities in the Border and Midlands region, to train local businesses on customs and to the Revenue Commissioners for customs staff to monitor trade moving east-west between the Britain and the Republic.

Coveney accepted that, despite all the Brexit readiness, businesses were still unsure of how to spend their money to prepare for Brexit until they got a “bit more certainty” from negotiations that have stalled. He went so far as to call a no-deal Brexit “carnage”, particularly for Britain, but added that he felt such a scenario was very unlikely.

Background music

The political manoeuvres are all background music, however, as businesses have to get on with it and plan. The Government measures will certainly help but there could be further budgetary revisions should a soft Brexit harden dramatically.

Coveney ruled out a further mini-budget after Brexit, saying he didn’t believe one would be required.

This is where the Rainy Day Fund comes in - “if we have a stalling in the economy linked to Brexit or anything else for that matter that we haven’t predicted yet or haven’t seen coming,” he said. This was “prudent” and “sensible,” he said.

The Government hopes, with this budget, that Brexit brings light drizzle but, still, it also has to be ready for torrential downpours.