Thursday 22 March 2018

Brexit: Finance Minster Noonan says referendum decision may have implications for future budgets

Michael Noonan. Photo: Tom Burke
Michael Noonan. Photo: Tom Burke

Finance Minister Michael Noonan said the Brexit won’t affect the Irish budget in 2017 but may have some implications in budgets to come.

“I can assure people that because of the complexities of calculating the fiscal space, the amount of resources available for the budget, this (Brexit) will have little or no impact on the fore-coming budget in October for 2017 but it may have some impact on budgets towards the end of the budgetary cycle as we move beyond 2019/20/21,” Noonan told RTÉ Radio One.

“It will have an impact on growth. The sterling and euro seem to be moving down in tandem. The devaluation of sterling is seven pc, the euro is five pc. If the euro was staying strong and the sterling was weakening it would have a big impact on our terms of trade. But as they’re moving in tandem the impact is very little this morning.

The Finance Minister said it will take months of calculating to see what the medium term effect the Brexit will have on Ireland.

“From the Irish perspective it’s in our best interest that aspects of the European community like the single market will continue and we can trade freely without letter hindrance with our colleagues in the United Kingdom like we have previously done.

“I’m confident that we can play the next budget and the one after with minimal effect and then there are a lot of other circumstances that can change from there on out.

“There is nothing catastrophic for Irish fiscal policy on the horizon but there is the possibility of having less resources in 2019/20/21. But as we have already decided to put a billion a year into a rainy day fund we’ll see, we have a buffer in place for downturns.”

Noonan said that while the downsides are “certain” the upsides of the UK leaving the EU are “speculative”.

“There may be upsides if there was a transfer of activity from Dublin to London or if there was  a transfer of foreign direct investment from the Unites States to Ireland instead of the UK.”

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