No-deal Brexit will make welfare increases impossible – McGrath

Minister of State says in ‘doomsday scenario’, available resources must go to at-risk sectors

The Government will not be able to afford across-the-board €5 increases in social welfare payments if there is a no-deal Brexit, Minister of State Finian McGrath has said. Photograph: James Forde

The Government will not be able to afford across-the-board €5 increases in social welfare payments if there is a no-deal Brexit, Minister of State Finian McGrath has said. Photograph: James Forde

 

The Government will not be able to afford across-the-board €5 increases in social welfare payments if there is a no-deal Brexit at the end of October, an Independent Minister has said.

Minister of State for disabilities issues Finian McGrath recently called for further €5 increases – a feature of recent budgets – to be included in the October 8th tax and spending package but now says a no-deal Brexit would make this unaffordable.

The Dublin Bay North TD told The Irish Times podcast Inside Politics: “I wouldn’t be looking for tax cuts in a doomsday scenario but I would be fighting for public services and fighting my patch.

“I am in favour of targeting welfare increases to the most needy, whether it is people with disabilities or children in poverty,” he said. “To answer your question about the €5 – if we have a situation where we are in a financial battle over Brexit, the situation is we can’t afford it. It is as simple as that.”

Minister for Finance Paschal Donohoe is expected to have some €700 million available for new spending regardless of what happens with Brexit. The Government will, however, run a deficit rather than a small surplus if the UK leaves the EU without a deal on October 31st.

Should there be an orderly Brexit, the Government will run a surplus of 0.4 per cent of GDP next year. However, a no-deal exit would see the surplus swing to a deficit of 0.5-1.5 per cent, with deficits also posted up to 2023.

Sectors at risk

Mr McGrath said that should the UK crash out, available resources must be used to support at-risk sectors of the economy such as agrifood and small businesses.

However, Willie O’Dea, Fianna Fáil’s spokesman on social protection, insisted that his party and Fine Gael had promised in their last election manifestos to increase welfare to a level that has not yet been met.

“The budget figures are not going to change,” the Limerick city TD said in reference to the amount of money available on budget day. He added that a no-deal situation would involve borrowing more to fund spending commitments.

Michael McGrath, Fianna Fáil’s finance spokesman, had earlier said tax cuts would not be a priority if there is a no-deal Brexit. This could result, he said, in a “negative swing of over €6 billion in our budget deficit”.

“It certainly would not be prudent in that context and against that backdrop to introduce income tax cuts that you may well find yourself having to reverse in a short period of time. We are not in normal times. The threat we are facing is very significant.”

He said that “come what may” in October, Fianna Fáil would be advocating that “that core public services are protected and indeed improved”.

He also told RTÉ’s Today with Miriam O’Callaghan the next general election should not be held until spring. The Irish people would prefer their public representatives to focus on the challenges ahead because of Brexit in the event of a “crash-out Brexit” or a general election in the UK, he added.