Brexit backstop is not a ‘trap’, says Irish finance minister

Paschal Donohoe told BBC Radio 4’s Today programme: “In terms of the charge that the Irish Government is looking to trap anybody in any kind of arrangement, that is absolutely not the case.”

Mr Donohoe said: “The so-called backstop was always an insurance policy.

“But, equally ... we do not want to see the return of customs checks and tariffs on our island.”

The finance minister was speaking after the Irish Government insisted it stands ready to absorb the impact of a no-deal Brexit as it unveiled a budget with a 1.2 billion euro fund to help weather the storm.

The package, the majority of which will only be drawn down if the UK leaves the EU without an agreement, includes 650 million euro to support the agri-food and tourism sectors.

There will be 200 million euro made available to government departments immediately, deal or no deal, to increase staffing levels and upgrade airports and ports.

The Government will need to increase borrowing to fund the support package, much of which will be spent in the form of loans, grants and capital funding.

Paschal Donohoe said the budget was “without precedent”.

“This is a budget developed in the shadow of Brexit and the context for Brexit has shifted to no deal as our central assumption, this does not mean no deal is inevitable, but equally we stand ready if it does happen,” he told the Dail parliament in Dublin.

“In preparing for no deal we can ensure the Government has the necessary resources to meet the impact of Brexit, keeping our public finances on the credible path they have been on since 2011.

“We must increase the level and range of supports to ensure our economy is protected and this is why we are announcing over 1.2 billion euro, excluding EU funding, to respond to Brexit.”

The spending plan is based on the anticipated gloomy financial outlook if the UK leaves with EU without an agreement on October 31.

“A no deal is unpredictable,” said the minister.

“It will impact different sectors in different ways.

“Our response will demand flexibility.”

The budget also included measures to tackle climate change, including a six euro per tonne hike in carbon tax.

As part of the Brexit pot, 365 million euro is also being provided for extra Social Protection expenditure linked to a no deal, while 45 million euro will provide increased supports for workers in adversely affected parts of the country, such as the border region.

The police force in Ireland will see its budget increased by 81 million euro in 2020, a 4.7% increase.

This will deliver up to 700 new Garda recruits, and extra civilian staff to allow for more frontline policing.

Health expenditure is set to increase by 6.3% to 17.4 billion euro next year.

Concluding his budget speech, Mr Donohoe said: “Brexit is a great challenge. But our country will grow and our economy will develop.

“Budget 2020 aims to make progress on much, at a time of risk, but also at a time of opportunity.

“It aims to further improve our national finances while the demands on public spending are so many.

“It marks a necessary step in our response to climate change while conscious of the needs and difficulties that this step creates.

“And it does all this while continuing to get our economy ready for Brexit.”