A no-deal Brexit threatens to push Ireland into a budgetary deficit, Ireland’s deputy premier has warned.
Simon Coveney said the economy would be impacted if the UK crashes out of the EU on March 29 because the Irish government would have to borrow money to fund and protect vulnerable sectors.
Mr Coveney made the comments during a parliamentary committee meeting on Thursday on the implementation of the Good Friday Agreement.
“Nobody should pretend that we can have such a comprehensive contingency plan in place that a no-deal Brexit can be managed easily,” Mr Coveney said.
“It’s nonsense. It will have an impact on our economic growth.
“It will have an impact on jobs that otherwise would have be created.”
He added: “It will mean that we will probably have to operate on the basis of a deficit again for another year or two rather than surplus because undoubtedly we may have to borrow money to fund and protect vulnerable sectors.”
The Irish Exchequer recorded a budget surplus last year for the first time since the financial crisis.
A budget surplus of 106 million euro was posted in 2018.
In January the government said it expected to run another surplus this year.
Mr Coveney described the possibility of Britain imposing tariffs on Irish products post-Brexit as “crazy”.
He said the possibility of milk that’s produced in Northern Ireland but is processed in the Republic being subject to a potential tariff of about 40% would be a bad situation for everyone involved.
About 40% of milk produced in Northern Ireland is processed south of the border.
“It would be crazy and we can’t allow it to happen,” he said.
“I don’t believe it will happen but we don’t control all the levers.
Mr Coveney added that this was one of the reasons they were planning for a worst case scenario.
The Irish Government will publish its no-deal Brexit legislation on Friday.
The committee heard the Tanaiste reiterate that the best and only way to ensure an orderly withdrawal of the UK from the EU is to ratify the Withdrawal Agreement.
He said the Irish government remained convinced the backstop is absolutely necessary, adding that at present there was “no credible” alternative arrangement being put forward by the UK Government.
“We have to try and find a way to provide the reassurance that many in the British parliament in Westminster are seeking before they can ratify this deal.
“We’re trying to do that in a way that doesn’t undermine the effectiveness of a guarantee insurance mechanism…to reassure people that they will never face the re-introduction of physical border infrastructure between the two jurisdictions on this island.”
He added: “Alternative arrangements may well emerge, we have to have an open mind on that.”