‘Second shock’ of Brexit may be too much for Ireland to cope with, Coveney told

Protection of €85bn trading relationship ‘vital to our overall economic recovery’

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Minister for Foreign Affairs Simon Coveney has been warned that Ireland is ‘facing into Brexit from a fundamentally different economic starting point than for a no-deal Brexit in 2019’. Photograph: Niall Carson/PA

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Households and businesses may not have the capacity to withstand a second economic shock as a result of a hard Brexit at the end of the year, Minister for Foreign Affairs Simon Coveney has been warned, as the Government intensifies its planning for the UK’s departure from the EU.

Given the economic damage already wrought by Covid-19, Mr Coveney has been warned that Ireland is “facing into Brexit from a fundamentally different economic starting point than for a no-deal Brexit in 2019”.

In official briefing documents given to the Minister as he resumed office following the formation of Government, officials also told him that protecting the €85 billion trade link with Britain will be “vital to our overall economic recovery” and that Ireland needs to build a new relationship with the UK and with British cabinet ministers.

Officials warned that “the capacity of households and businesses to manage a second economic shock will be more limited” in light of the pandemic.

The Government is also hoping that a “landing zone” for major outstanding issues in Brexit talks can be found in September or October but, at present, the gap between the UK and the European Union remains “wide”.

Contingency plans

All Government departments are intensifying Brexit contingency plans and a new Brexit Omnibus Bill will be brought to the Oireachtas after the summer recess.

“The gap between the EU and UK positions remains wide, including on key issues such as the level playing field, fisheries, police and judicial co-operation and governance.

“For progress to be achieved, it will be necessary for the UK position to move considerably in the direction of what they had agreed to under the political declaration.

“The political declaration sets out the parameters for ‘an ambitious, broad, deep and flexible partnership’. However, in negotiations, the UK has adopted a significantly less ambitious approach,” the briefing says.

The October European Council and discussions held in advance will be “crucial in identifying the landing zone for a possible agreement and on implementation of the protocol”.

Officials have said that despite the continuing uncertainty on the future relationship between the UK and EU, the Irish Government should now work to develop a new relationship with the UK.

“Driving a renewal of the relationship is a priority task, given its importance in terms of our joint stewardship of the Good Friday Agreement, our people-to-people relations, and the Ireland-Great Britain economic and trading relationship worth €85 billion per annum, the protection of which will be vital to our overall economic recovery.”

It says, as part of that, “identifying how best to build relationships across the new British cabinet and wider political system will be important”.

“In terms of immediate contacts, there has been good East-West communication on Covid responses, which could usefully continue.

“Engagement to protect Irish interests will also continue to be necessary, as the final picture of the UK’s future relationship with the EU emerges.”

Officials have recommended the establishment of a new consulate in the north of England.

In terms of Ireland’s relationship with the US, officials said that “developing our bilateral relationship with the US will take place against the backdrop of difficult policy issues relating to immigration, trade and transatlantic relations”. It said EU Trade Commissioner Phil Hogan was “committed to progressing an EU-US trade deal and Ireland is well placed to play a role in this”.

The Minister was also asked to focus on “close engagement with the Trump and Biden election campaigns in the lead-up to the November US presidential election”.

On the relationship between Ireland and Canada, Mr Coveney was told that “ramping up the relationship with Canada will be a key component of our economic response to the disruption caused by the pandemic”.

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