Irish taxpayer should not bear the cost of Brexit

Andy jalil -

andyjalil@aol.com -

The main opposition party in Ireland, Fianna Fail, has warned the government that the country should not be expected to shoulder any financial burden from Britain’s decision to leave the European Union.

The party’s senior MPs have insisted Brexit should not cost the Irish taxpayer or affect the government’s budget spending decisions.

The party’s finance spokesman, Michael McGrath said if the UK leaves the EU customs union — which seems likely — it will present Ireland with a “range of difficulties” and will be “devastating” for cross-border business.

“In terms of costs involved, that’s going to be part of negotiations, but it certainly can’t be a bill landed at the feet of the Irish people,” said McGrath.

Fianna Fail’s foreign affairs spokesman Darragh O’Brien said the government should “not give up” on retaining the current border arrangements, but if they do change, there should be no cost incurred by the Exchequer.

Simon Coveney of Fine Gael (the party in government) said discussions had been taking place directly between the Irish and British governments surrounding the UK’s withdrawal from the EU.

Meanwhile, senior Revenue Commission officials revealed the potential return of customs tariffs, declarations and checks would cost the taxpayer several million euros in terms of extra staffing, facilities, new technology and a major upgrade of IT systems.

The vast bulk of the extra cost is expected to be borne on the trade facilitation side — simply ensuring that commercial goods vehicles are able to move as freely between North and South, and Ireland and Britain, as possible.

Revenue will need to have systems in place that will allow for a significant increase in information about the level of goods being transported across the border, and between the two islands. Camera technology is also likely to be needed to allow for the free flow of traffic when the UK pulls out of the customs union.

Experts had been examining ways of preventing the introduction of a hard border between Ireland and Britain’s Northern Ireland. Discussions on this — among other matters — had also taken place between Enda Kenny, the Irish Prime Minister and Theresa May during her visit to Dublin at the end of January.

The Department of Finance’s most senior officials have for some time been putting numbers on the scale of the challenge that Ireland faces. There are fears that a hard Brexit could add 20 billion euros to the national debt, according to the department.

There are four officials at the department’s head office in Dublin dedicated to addressing Brexit. The chief economist at the Department of Finance, John McCarthy, said exports to the UK could fall as much as a third in the event of a worst-case Brexit deal.

The figures are based on a model that looked at likely trade levels if the UK cuts all ties with the European Union bar those common to all World Trade Organization (WTO) members.

They also assume no policy response by the Irish government, which is highly unlikely. Under WTO rules, exports of meat would be hit with a 50 per cent tariff, and tariffs would add 25 per cent to the cost of Irish dairy for UK consumers.

Economic modelling work by the Department of Finance and the Economic and Social Research Institute suggests that GDP would shrink by 3.5 per cent after five years. The figures are based on the loss of potential growth and jobs in the Irish economy.

They show a hard Brexit would mean slower growth — with the economy 4 per cent smaller after 10 years — and fewer jobs being created, but not an overall decline in employment, based on current trends.

In addition to the four staff in the Department of Finance in Dublin there are five in Brussels working full time on this issue. McGrath said, “A lot of people will be shocked by how threadbare the resources in the department are.”

He added: “The Department of Finance is responsible for shaping our economic strategy and has a central role to play in designing and implementing our response to Brexit.”

However, the Secretary General of the department, Derek Moran said that the dedicated staff did not represent the true numbers working on the issue, saying it was being dealt with on a “whole of department basis,” and that he believed his department was up to the challenge posed by Brexit.