Donohoe to deliver budget on October 8th, three weeks before Brexit date

Minister for Finance to set out two scenarios in summer economic statement next week

 Minister for Finance  Paschal Donohoe said  he would decide before October 8th which scenario was more likely, and frame his budget accordingly. Photograph:  EPA/Julien Warnand

Minister for Finance Paschal Donohoe said he would decide before October 8th which scenario was more likely, and frame his budget accordingly. Photograph: EPA/Julien Warnand

 

Minister for Finance Paschal Donohoe will deliver the budget on October 8th this year, he said on Tuesday, just three weeks before the date for the British exit from the EU.

Mr Donohoe will deliver his summer economic statement next week, which will outline the parameters for the budget and next year’s spending estimates.

However, unlike previous years, Mr Donohoe will set out two scenarios next week, one which describes the likely budget in the case of a no-deal Brexit, and one which is predicated on an orderly Brexit or no Brexit at all.

Mr Donohoe said on Wednesday that he would decide before October 8th which scenario was more likely, and frame his budget accordingly.

Insiders said this meant that the budget would inevitably take the cautious course, and avoid large spending increases seen in recent years. Cabinet Ministers discussed the issue on Tuesday, and political sources briefed on the discussion said the inevitable conclusion would be that the “no-deal” budget would have to be delivered.

But Mr Donohoe said even if his judgment was proven wrong by events at the end of October, he would not revise the budget delivered early in the month.

“What I will be doing in the summer economic statement, which I will be doing next week, is I will be outlining different economic scenarios against which Budget 2020 will be formed,” Mr Donohoe told journalists at Government Buildings on Tuesday.

“So we will be looking at the kind of economic scenario that the country could face if we were to be in a deal scenario or a continuation of the status quo. But what I will also be outlining in the summer economic statement is if a disorderly Brexit were to occur, what then would be the backdrop against which we would be preparing a budget,” he said.

“There’ll be two different scenarios outlined in the summer economic statement and then the Government later on in the year will have to make a decision,” Mr Donohoe said. “I will make a recommendation to that effect regarding what is the best scenario against which we form a budget.”

Likely scenario

Asked how he would decide just weeks before the Brexit date, and 10 days before the crucial European summit meeting, whether there would be a no-deal outcome, Mr Donohoe said: “We will have to form a judgment regarding what we think is the most likely scenario.”

Asked what would happen if his judgment was proved wrong – ie, if he planned for a no-deal Brexit and a deal or an extension was agreed, he said: “I’m not planning to bring in another budget.”

Within Government it is expected that Mr Donohoe will use the threat of Brexit to dampen down expectations of significant spending increases in the budget. However, the Brexit threat may also have implications for the promises of tax cuts, unveiled by Taoiseach Leo Varadkar at last year’s Fine Gael Ardfheis, insiders said.