Friday 23 August 2019

No-deal Brexit has become 'much more likely' - Taoiseach

European Union's chief Brexit negotiator Michel Barnier and Taoiseach Leo Varadkar
Picture: Olivier Matthys/Pool via REUTERS
European Union's chief Brexit negotiator Michel Barnier and Taoiseach Leo Varadkar Picture: Olivier Matthys/Pool via REUTERS
Kevin Doyle

Kevin Doyle

A DISORDERLY Brexit has become “much more likely in the past few months”, Taoiseach Leo Varadkar has warned.

Setting out his pitch for the next budget today, Mr Varadkar said the country needs to wary of internal and external threats.

The Government will publish an updated No Deal Brexit Contingency Action Plan next month, setting out the state of readiness and further actions to be taken before the end of October.

Mr Varadkar said the planning would help the country deal with the impact but the situation “would be deeply challenging with many risks which can’t be mitigated away”.

He said if a no deal does occur on October 31 fears of the economy overheating will be cast aside.

“It will slow down rapidly, even contract,” he said.

But the Taoiseach added: “We must also guard against the sin of exaggeration.  We are not back where Ireland was in 2007.

“Yes, there are serious risks ahead.  We acknowledge them and will respond to them – and we will respond with actions as well as with words and we will do so proportionately.”

Speaking to political and civic leaders at the National Economic Forum, Mr Varadkar said Budget 2020 will have to managed carefully.

“I believe this means two things.  First, we must not allow our day-to-day spending increase too fast.  In terms of our national infrastructure we are playing catch-up, and our detailed plans in Project Ireland 2040 are deliberately designed to avoid this problem.

“Second, we must not become over-reliant on volatile revenues.  As you know, over the last few years we have benefited from bumper corporation tax receipts.  However, we can’t assume that money will always be there,” he said.

Mr Varadkare said that even if the Brexit Withdrawal Agreement is approved there will still be economic issues on the horizon.

He told the forum that “the impressive performance of our economy has resulted in the emergency of real capacity constraints”.

“Labour supply, increasing wage costs and infrastructure bottlenecks threaten to over-heat the economy if not managed carefully. The housing shortage is a huge social and economic risk.”

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