Tuesday 20 February 2018

Ireland can bend EU rules to deal with Brexit, commissioner suggests

Taoiseach Enda Kenny has complained about the EU limits on public spending. Photo: REUTERS
Taoiseach Enda Kenny has complained about the EU limits on public spending. Photo: REUTERS
John Downing

John Downing

Ireland can look to bend EU borrowing and spending rules to help cope with Brexit fallout, a letter from an influential European commissioner suggests.

The EU commissioner responsible for the euro and financial stability, Valdis Dombrovskis, has stated in writing the reality that Ireland could be deemed to be in "exceptional circumstances" due to the Brexit economic fallout. The Department of Finance has estimated that, in a worst case scenario, Ireland could lose €20bn over a decade to Brexit, giving the economy a huge jolt.

Other member states have already been granted such exemptions to cover the sudden costs of additional security to cope with threats from terrorism, and from the cost of catering for a huge influx of refugees. The concession is real recognition by Brussels of Ireland's economic risks from Brexit.

Taoiseach Enda Kenny has already complained about the EU limits on Ireland's public spending. There have been additional fears that the Brexit fallout would further stress provision of public services and infrastructure investment.

Read more: 'There could be no flights to and from UK for months after Brexit' - Ryanair chief

Recognition by Brussels of "exceptional circumstances" arising from Brexit means exemptions from EU rules on short-term deficit and longer-term debt can be invoked to allow Ireland support vulnerable sectors like food exporters.

In reply to a European Parliament question to Fine Gael MEP Brian Hayes, Mr Dombrovskis notes Articles 5 and 9 of the law underpinning the EU's 1997 Growth and Stability Pack allow for these exemptions.

The rules also allow member states to retrospectively apply for permission to exceed the limits when the spending demands are very suddenly increased by exceptional events.

But the commissioner, who comes from Latvia, also warns that the exemptions must be very tightly defined - and not based on arguments that the overall Irish economy has been put under strain from Brexit.

"The clause focuses on short-term, well-identified costs, rather than the impact of long-term structural economic shocks."

Mr Hayes said: "No other country has such close economic and trading ties with the UK. The commissioner has given us a strong signal that Ireland can avail of these flexibility provisions if the effects from Brexit become overwhelming."

Irish Independent

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