Wednesday 21 August 2019

Kevin Doyle: 'A soft landing will not be easy to achieve in a hard Brexit'


Finance Minister Paschal Donohoe. Photo: Gareth Chaney/Collins
Finance Minister Paschal Donohoe. Photo: Gareth Chaney/Collins
Kevin Doyle

Kevin Doyle

Paschal Donohoe reckoned it would be "unhelpful" for him to give his views on the Conservative Party leadership process.

He didn't want to stir up British blood at a time when two men vying to be prime minister already have so much of it rushing to their heads.

It's hard to see how anything he could say would have added to the melodrama that is British politics, but the Finance Minister likes us to think that he's cautious in every aspect of his politicking.

At the launch of the Summer Economic Statement (SES), Mr Donohoe did admit that events in London have "made clear to me what is the right thing to do".

Not since the economic crash have officials in the Department of Finance been so nervous about Ireland's purse.

The story goes that back then nobody in government shouted 'stop' as the country careered towards a cliff-edge. This time we've had three years to prepare for the worst and hope for the best.

Mr Donohoe's twin-track budget plan is not as diverged as had been suggested in recent days. In fact the money available for 2020 will remain the same, regardless of what happens with Brexit.

The difference is that in the good scenario the Government will comfortably have a €700m surplus for a pre-election spending spree. If Brexit goes badly, we will be borrowing to keep the show on the road.

Over the course of five years the Government is prepared to add €30bn to the national debt. That's almost half of the €64bn used to bail out the banks.

Mr Donohoe told reporters yesterday that if Boris or Jeremy Hunt drags the UK out of the EU then this country will have to deal with "very big questions".

We are starting from a reasonably healthy position with 2.2 million at work, booming, although risky, corporation tax receipts and steady growth.

Yet Mr Donohoe said: "We have to be very careful about decisions that are made between now and October, and that's what I'm going to be."

The Opposition is mostly on board, albeit it sees lots of problems with the figures being floated by the Government.

Fianna Fáil's Barry Cowen noted that financial problems with the National Children's Hospital and National Broadband Plan are now centre-stage.

"Between 2020 and 2024 we will need an extra €1.07bn for broadband and we could need up to €600m for the National Children's Hospital.

"To hope that this money simply comes out of future budget allocations is fanciful. If a no-deal Brexit comes to pass, these two projects will considerably restrict our ability to effectively respond to it," he said.

Sinn Féin and the Labour Party both noted that the SES makes no allowance for the Christmas Bonus which will cost in the region of €300m this December.

A hard Brexit is looming so we must plan for a soft landing. But it won't be easy.

Irish Independent

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