Irish Budget Prepares For No-Deal Brexit
In Ireland, on September 11, the Irish Finance Department revealed that given the lack of clarity regarding the timing and format that the UK’s exit will take, and with the Budget just four weeks away, the Government has decided to formulate the Budget on the basis of a disorderly Brexit.
The Irish authorities have reported that they are committed to a budgetary package of EUR2.8bn, EUR2.1bn of which has been pre-committed to spending measures. This leaves about EUR700m for tax-side measures.
The Department said that the Government is taking a “twin-track” approach to the Budget. This involves funding services and making progress on particular policy areas and supporting sectors and regions most exposed to Brexit-related disruption.
Finance Minister Paschal Donohoe explained that: “A no-deal Brexit will have profound implications for Ireland on all levels. These include macroeconomic, trade, and sectoral challenges, both immediately and in the longer term. A crucial response is to build up our capacity to respond to the challenges.”
According to a statement released by the Ministry of Finance, the key factors influencing the Irish government’s actions were the need to “give certainty to businesses and citizens that the government is prepared for a no-deal Brexit and stands ready to support the economy in such a scenario”.
The Ministry of Finance went on to stress the importance of stabilizing Ireland’s public finances, observing that: “Given the uncertainty and lack of clarity regarding the timing and format that the UK’s exit will take, preparing for a no-deal scenario is the most sensible approach.”
It concluded by stating that: “Finally, is the need to avoid a situation in which decisions made in the Budget might need to be reversed in future. Assuming a no-deal Brexit ensures the government has the necessary resources at its disposal to meet the impact of this exceptional challenge, whilst preserving the longer-term sustainability of the public finances.”
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