Tuesday 17 October 2017

Rainy day fund 'not enough' for Brexit

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Stock image

Shona Murray

A rainy day fund will be set up in a bid to protect the State from economic shocks and help deal with the fallout from Brexit.

Some €1.5bn will initially be coming from the Ireland Strategic Investment Fund, with annual contributions of €500m from the Exchequer from 2019 onwards.

Finance Minister Paschal Donohoe said the fund was "an important step" in supporting national finances in a "changing and risky" world, in particular when the full impact of Brexit is better known.

The fund is also in line with the Programme for Government agreement with Fianna Fáil, and in theory creates a bulwark to protect the country's finances in times of global economic turmoil.

However, business group Ibec says the money set aside is "immaterial" in the event of the type of economic shocks that may occur in the global economy.

Fergal O'Brien, Ibec's director of policy and chief economist, said the rainy day fund is "not what the economy needs right now", given how the greatest threat to future foreign investment is the lack of investment in infrastructure and housing.

He said in relation to Brexit, "it's certainly not a rainy day fund that will help", and that there should be better support through attractive investment for the companies affected.

Defending the fund, Foreign Affairs Minister Simon Coveney said: "We've found a way to move from where we were seven years ago, where we weren't able to borrow money except through emergency bailout.

"Now we're the fastest growing economy in Europe for the third year running, so we're now putting money aside."

Irish Independent

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