Analysis and Prioritisation
- Department of Finance preparations
- Modelling the Medium to Long Term Potential Macroeconomic Impact of Brexit on Ireland – November 2016
- Getting Ireland Brexit Ready - October 2016
- UK EU EXIT – An Exposure Analysis of Sectors of the Irish Economy - March 2017
- Scoping the Possible Economic Implications of Brexit on Ireland – November 2015
Programme of Engagement
- Update on Ireland's International Tax Strategy - October 2016
- IFS Ireland
- SME Credit
- Speech by the Minister for Finance Michael Noonan T.D. to the City of London Corporation
“The outcome of the UK referendum on EU membership presents important challenges for the Irish economy. While this arises at a time when Ireland’s economic recovery is now firmly established across all sectors and the public finances are on a much firmer footing, we now need to protect the progress of recent years in the face of this new development.”
“Work on the economic impacts of Brexit has been ongoing in my Department since well before the UK referendum including the funding of an ESRI study published in November 2015 under our joint research programme.”
"The work being done by the Department, including the work of Minister of State Murphy T.D. who has responsibility for Financial Services, will be an important input to ensuring that Ireland will be in a position to counter any negative economic impact arising from Brexit and to ensure that Ireland’s interests are protected in the upcoming negotiations at EU level.
"The Department will continue to monitor the economic impacts, to carry out relevant analysis and to frame budgetary policy advice in this new context."
- Minister for Finance Michael Noonan T.D.
Listen to Minister Noonan's interview with Reuters at the World Economic Forum in Davos on Brexit and the Irish Economy
The Irish Government is determined that all possible preparations are made ahead of the UK leaving the EU. All Departments and Agencies have been charged with making Brexit a priority, with strong co-ordination at key levels across Government. To read more about the Government's preparations on Brexit, check out this dedicated section on the Government's News Site. There you can sign up to receive regular email updates on the latest Government developments regarding Brexit.
The Department of Finance has been assessing and preparing for the impact of Brexit since well before the referendum on 23 June 2016, with this work now intensified. The primary areas for the Department of Finance relate to the economic and financial sector implications stemming from Brexit. This work is being undertaken within the whole-of-Government framework established by the Department of the Taoiseach and will be an important input role to ensuring Ireland’s interests are protected in the upcoming negotiations at EU level and in terms of minimise any adverse impacts on our economy.
Internally the Department of Finance undertakes rolling analysis which focusses on the key policy issues arising for the Department:
- Macroeconomic impact
- Financial Stability issues
- EU financial services policy
- Irish financial services sector
- EU Budget
This research was conducted under the joint Department of Finance and ESRI Research Programme on The Macroeconomy and Taxation.
Click HERE to listen to Minister Noonan describe the findings of this paper
Looking at the effect ten years after a UK exit, a WTO scenario results in the level of GDP being 3.8 per cent below what it otherwise would have been in a no-Brexit scenario; the bulk of the impact occurs in the first five years. As a result, the level of employment is 2 per cent below what it would otherwise have been, with the unemployment rate nearly 2 percentage points higher. The most severe scenario indicates that the Irish economy will be more severely impacted than the UK economy.
This paper provides an overview of:
- how Brexit may impact on the Irish economy. It identifies the sectors that are most exposed to the UK in terms of trade links and describes their key characteristics.
- the policy responses to Brexit that have been introduced in Budget 2017 to enable exposed sectors of Ireland’s economy to remain competitive, and to protect the public finances from Brexit related shocks.
In Budget 2017, the Minister for Finance introduced a number of measures to help get Ireland Brexit ready
- retention of the 9 per cent VAT rate for the hospitality sector
- Foreign Earnings Deduction extended until 2020
- extension of SARP until 2020
- €400 increase in earned income tax credit
- rainy day fund and
- new debt-GDP target of 45 per cent by the mid-part of the next decade.
Budget 2017 is just the start, more measures will be implemented as the EU UK negotiations develop over the two years after Article 50 is invoked. The priority areas for this Government remain unchanged – this is about
- our citizens,
- our economy,
- Northern Ireland,
- our Common Travel Area and
- the future of the EU itself.
Additionally on Budget Day a more detailed version of the sectoral exposure analysis was published.
- This paper examines the trade exposures of sectors of the Irish economy to the UK in light of the United Kingdom’s decision to exit the European Union.
- The research in this paper is motivated by a desire to better understand which sectors of Ireland’s economy are most exposed to the UK’s departure from the EU.
Note: This paper is an update of a previous version of the paper that was published with Budget 2017 on 11 October 2016. Following publication of the October 2016 version, the CSO released updated data which is now included in the revised paper.
In advance of the referendum under the joint Department of Finance/ ESRI research programme, an initial scoping study on the potential implications of Brexit was undertaken. The purpose of this study was to:
- Describe and quantify the key economic linkages which have developed over time between Ireland and the UK in the context of EU membership, and
- Make an initial assessment of the risks and opportunities to these economic linkages in the context of potential future developments at EU-level, in particular a UK exit from the EU.
The main findings of the paper relate to the implications Brexit may have for:
- Foreign Direct Investment
- Energy in Ireland, the UK and NI
- Migration across Ireland and the UK
Ireland is currently preparing for the upcoming negotiations. As part of this preparation, an extensive programme of engagement is underway with our EU and UK partners. For example, Minister Noonan meets his EU counterparts at Council meetings as well as undertaking other bilateral meetings. This work is supported by an extensive diplomatic effort across the EU to emphasise Ireland's concerns and to ensure that they are fully reflected in the EU position once negotiations commence.
We also have long-established connections to London and Belfast, mainly through the Good Friday Agreement. In early January Chancellor of the Exchequer Philip Hammond visited Minister Noonan in Dublin as a follow-up to a visit to London by Minister Noonan in Autumn 2016. Read Minister Noonan’s statement on this recent visit.
Listen to Minister Noonan Speaking in Brussels about Brexit during his attendance at the January 2017 meetings of EU Finance Ministers.
- Brexit, and the changing relationship between the United Kingdom and the European Union, is a significant factor when considering Ireland’s competitive position for attracting investment and jobs.
- A number of taxation measures have been announced in Budget 2017 with a view to getting Ireland “Brexit ready”.
- Ireland has committed to the BEPS process and will play its full part in implementation and we remain a leading supporter of international efforts to increase transparency in the area of corporation tax.
- Ireland’s International Tax Strategy sets out a Charter with the principles and objectives underlying Ireland’s international tax policy.
Where Brexit presents potential opportunities, we will of course seek to maximise these. In relation to international financial services (IFS), Minister of State Eoghan Murphy T.D. has responsibility for the implementation of our IFS2020 Strategy. We will continue to leverage the IFS2020 Strategy in order to maximise potential opportunities in the IFS sector. The latest iteration of the Strategy, the IFS2020 Action Plan 2017, places a strong focus on Brexit and is fully integrated into the wider cross-Government Brexit contingency planning.
The European Banking Authority
In October 2016, the Government agreed, on the recommendation of the Minister for Finance, Mr Michael Noonan T.D., to make a public declaration of interest in Ireland becoming the location for the offices of the European Banking Authority.
"While the UK continues to be a full member of the EU until the negotiations for their exit have been completed, preparations must be made for eventualities such as the relocation of certain European agencies such as the European Banking Authority. Ireland has a significant financial services sector, efficient transport links to other European capitals and the capacity to absorb the European Banking Authority’s re-location to Ireland.
Along with our IFS2020 strategy, whose implementation is led by Minister of State Murphy, our interest in hosting the EBA demonstrates the continued importance Ireland places in well regulated Financial Services. As a country with experience in providing links to banks and companies in the UK market, Ireland provides an ideal new home for the staff of the EBA.”
- Minister for Finance, Mr Michael Noonan T.D.
In the face of Brexit, the Government is supporting SMEs’ access to credit through targeted measures set out in our SME credit section. The success of this policy can be seen in the number of new credit providers active in the market, the increase in credit provision and the reduction in average interest rates for SMEs.