The Government regrets that as yet the Withdrawal Agreement agreed between the EU, including Ireland, and the UK has not been approved by the British Parliament. It continues to believe that it represents the bestoption for both the UK and the EU.
The Government recognises that, given the proximity of the formal date for UK exit from the EU of 29 March 2019 (may also apply to new exit date on 31 December 2020), the prospect of a no deal Brexit is very real. However the UK can avoid leaving the EU without a deal on 29 March next in a number of ways. This is, of course, ultimately a matter for the British Government and Parliament.
For its part, the Irish Government remains committed to working with our EU partners and institutions in turn and with the British Government to reach anagreed outcome.
In planning for the real possibility of a no deal Brexit, the Government’s approach will continue to be guided by the same priorities:
– ensuring the best possible outcome for trade and the economy
– the protection of the peace process and the Good Friday Agreement,including the principle of consent and there being no Hard Border
– the continuation of the Common Travel Area
– our continued commitment to our place at the heart of the EuropeanUnion
The Withdrawal Agreement and Political Declaration meet those objectives. They represent a balanced outcome for Ireland, North and South, for the UK as a whole, and for the EU as a whole. That is why achieving approval for thoseagreements between the EU and the UK remains our primary focus.
In the event that there is a no deal Brexit, while the context will be very different, our objectives will remain the same.
No Deal Planning by Government
Since before the Brexit referendum took place, the Government has beenpreparing for every eventuality.
At the Government meeting in Derrynane, Co Kerry, in July it was agreed that a central case scenario be used by all Government Departments and agencies forplanning purposes.
The Withdrawal Agreement and Political Declaration, which were subsequently agreed in November, are broadly in line with that scenario. Accordingly, the central case scenario remains a valid basis for future planning and action todeal with Brexit.At its Derrynane meeting, the Government also decided to step up contingency planning for a no deal Brexit. Since then, the Government has continued to
assess and plan for the impact of a no deal Brexit.
The challenges posed by a no deal Brexit require an understanding of the same issues as for an orderly Brexit, although of course they arise in a very different context and in a much shorter timeframe. In many significant ways, a no deal Brexit would pose unique, unprecedented and extremely difficult challenges forthe EU, including Ireland, and especially the UK.
In a no deal scenario
– United Kingdom (UK) would be a third country as of 29 March 2019 (may also apply to new exit date on 31 December 2020)
– the UK would, therefore, no longer be represented in Union institutions, agencies, bodies and offices, and the terms of the transition period, as provided for in the draft Withdrawal Agreement, would not come into effect
– the UK would be outside the acquis (all existing Union regulatory, budgetary, supervisory, judiciary and enforcement instruments and structures would cease to apply, including the competence of the Court of Justice of the European Union)
– contingency actions would be taken by the European Commission in a limited number of areas including citizens’ rights, financial services, air transport, road transport, customs and climate policy, among others A no deal Brexit would require an immediate focus on crisis management and possible temporary solutions (political, economic, administrative, legislative and communication), which would be rapidly implemented until the necessarylonger-term adjustments are in place.
For Ireland, a no deal Brexit would potentially involve severe macroeconomic, trade and sectoral impacts. Grappling with the enormous range of impacts both in the immediate short term and in the longer term will involve difficult and significant choices of a practical, strategic and political nature.
The Fiscal and Economic Impact
Due to the close economic, highly integrated and concentrated nature of the trading relationship with the UK, amongst all Member States Ireland could be the most adversely affected by the UK’s withdrawal from the EU and to the greatest extent in a no deal scenario.
The potential impact has been set out in a number of Government publications, including the National Risk Assessment published by the Taoiseach, the Budget 2019 documentation and other publications from the Minister for Finance and Public Expenditure and Reform, and the Copenhagen Economics report “Ireland and the Impacts of Brexit” published by the Minister for Business, Enterprise and Innovation.
The primary channel through which Brexit’s economic effects would emerge would be through application of WTO tariffs and regulatory divergence (nontariff barriers). These could affect supply chains and the cost and/or availability of imports from the UK.
A further fall in the value of sterling would impact on the competitiveness of Irishbusinesses, while a deterioration in economic conditions in Britain could impact on exports.
Whilst Brexit’s potential macro-economy impacts dominate headlines, Brexithas the potential to impact every element of economic functionality: trade flows,supply chains, economic and business operations, the labour market andconsumer confidence and spending.
There would be particular pressures on certain sectors, such as agri-food, fisheries, aviation and road transport, pharma-chemicals, electrical machinery, retail and wholesale business. The economic impact is also likely to be greater in certain regions – especially the border region – and on smaller businesses
that are more dependent on trade with Britain and Northern Ireland.
A no deal Brexit would have negative consequences for Irish growth, both in the short and long run, relative to a no-Brexit scenario. That is why the Government’s budgetary strategy aims to make the economy more resilient through creation of fiscal capacity, balancing the books, investing in capital infrastructure, providing dedicated loan funds for affected businesses and building resilience to larger economic shocks through the ‘Rainy Day’ fund.
Under adverse macroeconomic scenarios, an increase in exchequer borrowing and other measures might be required. The NTMA continues to keep its dealing and legal infrastructure under review, and remain confident that sufficientcoverage remains in a no deal scenario.
The Central Bank continues to monitor developments and to plan for all eventualities so that financial stability is maintained. A no deal Brexit would be an exceptional economic event which would be met
with exceptional measures to support the continued operation of the Irish economy and our international trading links. This response would be executed in close co-operation with our EU partners,
other Member States and the EU institutions.
As Britain’s nearest neighbour, Ireland would be seriously impacted by the sudden changes to the arrangements for security co-operation under a no dealscenario.
The British Government has indicated its concern about a range of no deal impacts in this area. These include no agreement on the security aspects of the withdrawal or future relationship with the EU, no access to EU databases or networks, no agreements with EU bodies, no application of EU law, no EUbased operational co-operation, no access to data on DNA, fingerprints, vehicles, criminal records, wanted persons or airline passengers, lapsed membership of EUROPOL and EUROJUST, the unavailability of European Arrest Warrants and no access to classified EU information as a third country.
There will also be a need to try to ensure continued EU-UK co-operation on
cyber security, civil protection, illegal migration, health security, countering
terrorism and violent extremism.Needless to say, all of these issues are even more pressing in the context of theisland of Ireland.
Northern Ireland / North / South Relations
In the absence of a Withdrawal Agreement, there would inevitably be questions over the protections offered by the Good Friday Agreement and to the rights and benefits enjoyed by the people of Northern Ireland.This includes both fundamental rights of citizens and also rights and entitlements associated with EU citizenship, such as the European Health Insurance Card, all the rights recognition of qualifications, access to higher education, ERASMUS, enforcement of civil law actions.
There would also be important gaps in the current arrangements for cooperation in policing and justice area which would have to be addressed –notably the absence of the European Arrest Warrant arrangements for extradition.
There would also be a need for action to ensure the continuation of the areas of
North/South co-operation identified in the joint EU-UK mapping exercise. These
include essential issues such as the co-operation in health, agriculture,
environment, telecommunications, inland waterways, the Single Electricity
Market and EU funding.
For Northern Ireland businesses and farmers, the prospect of operating outside the EU with no deal would be extremely serious. The Government would try to mitigate the effects to the extent possible, while recognising that this will be primarily a matter for the British Government and the Northern Irelandauthorities.
The commitment of the Government throughout the Brexit process to preventing the re-emergence of a hard border on the island of Ireland remains of the highest priority. The focus of the Government is on ensuring ratification of the Withdrawal Agreement and its backstop provisions.
Britain / Ireland East / West Relations
It is difficult to assess the full scale of the impact of a no deal Brexit on the British economy and British society. However, there is no doubt that there would be a very significant adverse economic and social impact and that Ireland would also suffer considerably in that context.
The Irish Government would work with the British Government, as a member of the EU27 but also as a neighbour and close friend, to seek to minimise the economic and social disruption. However, we are under no illusions as to the difficulties that would arise or the challenges involved in addressing them
These would include issues such as aviation, road haulage, delays within the UK and on ferries, the introduction of tariff and non-tariff barriers, the need for customs controls and checks on food, plant and animal products, the related need for additional storage capacity, issues relating to excise and VAT, issues relating to the provision of financial services and the status of contracts, ensuring the supplies of medicine and medical equipment, and difficulties withcross-border manufacturing supply chains.
There would also be significant issues for citizens’ rights, free movement of people, labour and skills shortages, and provision of cross-border public services that would have to be tackled by all the relevant parties. While the movement of business and of people out of the UK, which has already occurred to a certain extent, may present economic opportunities for Ireland, there is also a likelihood that it would accelerate and place furtherstrains on Ireland’s infrastructure – for example, this could put further pressureon already tight labour and housing markets and on public services in Ireland.
Ireland’s Response as Part of the EU27
The proposed approach at EU wide level will be essential in managing important sectors in areas of EU competency and regulated at an EU level. Ireland has engaged actively with the European Commission on Brexit preparedness issues. Along with all other EU27 Member States, the Government has participated in discussions dealing with a range of issues including financial services, transport, citizens’ rights and social security, professional qualifications, customs and border controls, taxation, fisheries,
climate and the environment, industrial goods, police and judicial co-operation,data protection and digital and telecommunications.
Government officials have also held bilateral discussions with the EU institutions on issues that are particular priorities for Ireland – for example, the landbridge, road haulage, controls at ports and airports, energy, medicines and data.
Discussions have also been held with those Member States that will be most strongly impacted by a no deal Brexit, notably those geographically close to the UK.
To date, the European Commission has published 81 stakeholder notices to assist citizens and businesses in EU Member States, including Ireland, to prepare for Brexit.It has also published a number of communications about contingency planning, most recently on 13 November and 19 December 2018.
Ireland will continue its close dialogue with the Commission to ensure maximum scope.
In its communication of 13 November 2018, the Commission clearly stated that it stands ready to engage with the Member States that will be most affected by a no deal withdrawal and in particular to support Ireland in addressing the specific challenges of Irish businesses. On 19 December 2018, a commitment was provided to ensure that current EU programmes, PEACE and INTERREG operating on an all-island basis will be protected.
Ireland’s Domestic Response
All Departments have drawn up sector specific plans identifying major challenges associated with a no deal Brexit and associated mitigation approaches. Work is progressing where possible at a technical level and has been ramped up, but without prejudice to securing agreement on a Withdrawal Agreement.
In their sectoral no deal plans, Departments have identified issues and associated actions that will need to be implemented to address or mitigate the impact of a no deal Brexit.
To date, these plans have identified some 45 issues that will require legislative changes that may be required in domestic law through both primary and secondary legislation. A committee of senior officials is drawing up proposals for the drafting and enactment of the necessary emergency legislation. This will be considered by the Government early in the New Year before being presented to the Dáil.
The Government will work very closely with all Opposition parties and Oireachtas members in this regard.
The Spring Legislative Programme is currently being prepared for presentation to the Dáil in January in the usual way. However, if it is judged that a no deal Brexit is likely, it will probably be necessary to use all available parliamentary legislation time to deal with the necessary legislation. The Government Chief
Whip has therefore also asked all Ministers to identify their non-Brexit legislation that is absolutely essential for enactment before the end of March 2019 so that the parliamentary schedule can be planned accordingly.
The Government has been running a significant national and regional communications campaign called “Getting Ireland Brexit Ready”. This campaign will continue into 2019 and it will be adjusted to reflect the specific implicationsof a no deal Brexit, as necessary and reflecting the need to react in a measured
manner to an evolving political and economic situation.
The Government will also continue to engage with all sections of society and all stakeholders, including through the National Brexit Stakeholder Forum, the AllIsland Civic Dialogue and through engagement by individual Departments and agencies. For example, the Minister for Business, Enterprise and innovation met recently with representatives of the retail, wholesale and distribution sector
to discuss Brexit contingency planning.
At its meeting on 11 December 2018, the Government decided to give greater immediate priority to the preparations for a no deal Brexit. Following that decision, new processes are being put in place across Government to give equal priority to no deal planning and Central Case planning. This will be coordinated by the Department of the Taoiseach and involve all Government Departments and agencies.
Given the proximity of the date of Brexit, it is now necessary in some cases to move from contingency planning to taking actions to mitigate the consequences of a no deal Brexit. The Government will continue to monitor developments and to take appropriate actions. An additional meeting has been scheduled for 3 January 2019 to discuss the increasing risks around a no deal scenario.