British Irish Chamber seeks €1bn Brexit war chest in Budget 2020
The Government should move quickly to seek exemptions from EU state aid rules and set up a €1bn investment fund to counter the effects of Brexit, the British Irish Chamber believes.
The Chamber, which promotes trade and investment between Britain and Ireland, said the October Budget "may be one of the most consequential Budgets in the history of the State", as the likelihood of a hard Brexit on October 31 grows.
Please log in or register with Independent.ie for free access to this article.
"Such an outcome would put in place the biggest obstructions to UK-Irish trade since the Second World War," it said in its pre-Budget submission.
While trade with the UK has fallen sharply as a percentage of Ireland's total, it remains a hugely important market for many of the country's firms, especially small and medium-sized enterprises.
In 2018, Ireland exported €16.1bn worth of goods to the UK, while nearly a quarter of all Irish goods imports came from Britain.
"To reassure Irish businesses and to offer immediate confidence to the Irish economy, the Chamber is calling for the Irish Government to establish a €1bn Brexit Response Fund," the submission said.
The Chamber also warned that changes to the global tax regime could hit State revenues hard, as governments worldwide try to crack down on the kind of profit-shifting by multinational companies that have helped fill Ireland's coffers.
Since 2015, receipts from company taxes have exceeded forecasts by more than €14bn, swelling the State's revenues and allowing it to move from deficits to a balanced budget, despite repeated overspending in areas such as health.
"The Government should look to reduce Ireland's reliance on volatile corporate tax receipts for the coming years by either increasing the budget surplus or by increasing the allocation to the rainy day fund," the Chamber said.
The group also highlighted the repeated failure of the Government to stick to its spending plans, a problem contained by the exceptional intake of corporation taxes.
"While acknowledging that Government expenditure has not returned to the unsustainable levels of growth seen during the Celtic Tiger years, in recent years there has been a significant upturn in current expenditure, which has risen by close to 20pc since 2015," the Chamber said.
The pattern of Government overspending means that in the event of an economic shock, the debt profile of the State could deteriorate rapidly and crimp much-needed investment in such areas as infrastructure and education.