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Pre-European Council Meeting: Statements (Continued)

Wednesday, 12 December 2018

Dáil Éireann Debate
Vol. 976 No. 5

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(Speaker Continuing)

[Deputy Micheál Martin: Information on Micheál Martin Zoom on Micheál Martin] The only thing which is clear is that no one has the faintest idea what the course of Brexit will be in the coming weeks and months and potentially for much longer than that. With the exception of the fundamentalist fringe of the Conservative Party and, unfortunately, the DUP, all accept the idea of a guaranteed open Border in Ireland but they do not agree on the wider issue of the UK's relationship with the European Union. The fact is that this is at its core. It is not about negotiations with the European Union; it is about a debate within British politics and society over which we have little or no influence. This period of growing chaos and uncertainty is not one we can assume will come to a halt by 29 March. Regardless of whether the deal is ratified, and there is still hope that this may happen because of the damage which any alternative will cause, the risk of a no deal outcome has risen dramatically. Circumstances have changed and we must respond accordingly. Ireland is now in a period of heightened danger for our economy and for a political settlement which has been a beacon of light in our modern history. This is not a crisis of our making but it is a crisis which we all have an urgent duty to respond to.

Let nobody be in any doubt, every single piece of evidence suggests that the impact of Brexit is under way and may escalate significantly. Far more worryingly, the evidence also shows that Ireland is nowhere near ready for many of the outcomes which have become far more likely in recent days. While past research has shown the medium-term and long-term impact of different Brexit scenarios this morning’s quarterly economic review includes a study of the impact in 2019. Using a very conservative approach, it states that a no deal outcome will reduce GNP growth by roughly 1.4%. That is a loss of €3.5 billion in only the eight months following Brexit. The shock will initially be concentrated in the trading sector but will, according to the report, be transmitted through that sector to the wider economy. This carries with it an immediate knock-on impact on public finances. While we have requested that the Minister for Finance publish details of the impact of a no deal scenario, a rough estimate shows that a hole of at least €1 billion will open in the budget figures for next year and this will escalate in subsequent years. The Government’s budget assumes an orderly Brexit, with a lengthy withdrawal period and no sudden shifts in policy. Two months after the budget his assumption is simply no longer valid. In fact, things could get much worse than this forecast suggests because it does not factor in a major devaluation of sterling or administrative chaos in the move to new systems.

According to the Central Bank and others, the impact of Brexit is already here. The bank’s latest report has identified evidence of trade with the United Kingdom being hit and causing a slowdown in expectations. My colleagues from Border constituencies, in particular, are reporting that companies are already struggling from lost competitiveness and heightened uncertainty. Consumer confidence has been hit and there is a growing sense of unease and even fear about what lies ahead.

Analysis by State agencies suggests that sterling devaluation is the biggest threat to many exporters, especially Irish-owned companies. Some 47% say they face serious difficulties as a result of the exchange rate reached this week, with most of the remaining firms facing serious difficulties if the exchange rate falls a further 10%. The hit to Irish business from Brexit-related devaluation is deep. Since David Cameron announced the date for the referendum in 2016, sterling has fallen by 25% against the euro. It really does not matter how efficient or dynamic one's business is, a 25% loss of competitiveness is enormous and is an existential threat.

Brexit has been a core political issue for my party since before the referendum was held. In the past two years I, as well as our spokespeople, Deputies Donnelly and Chambers, have regularly pushed the Government on levels of preparation. The only response has been to claim that everything is fine. Unfortunately, the evidence suggests preparations which are incomplete and some of which are really only starting at the very last minute. With little more than 100 days to go, it is no achievement to be citing the numbers of companies seeking basic information or the number of applications received for jobs. We cannot afford a repeat of what we have seen from the Government in so many other policy areas where spin about activity levels is used to cover up the lack of action on the ground.

The facts published by Government show that only a minority of impacted companies have preparations in place. Few have currency hedging strategies. Few have begun procedures for essential freight travel registrations. Minor grant schemes are helping a minority of companies in small but important ways. However, significant funding for cashflow disruption, tackling loss of competitiveness and diversification has not been distributed. The short-term loan scheme has allocated only 5% of its funding while the long-term loan scheme will not have distributed a single euro by next March. The Government itself does not appear to be anywhere near the needed level of preparedness.

The Taoiseach yesterday mentioned a series of actions which are required for a no deal scenario, none of which has had funding allocated or legislation published. The situation is that Ireland is facing a major threat and great uncertainty. This poses a direct challenge to everyone in this House as to how we react. Business as usual is not acceptable.

Can we show our ability to put the national interest ahead of party interests? As things stand, the first period of the agreement, which allowed the formation of this Government, is ending. My party entered this agreement in 2016 because it was the only way of being true to what we had promised our voters while also fulfilling the basic democratic responsibility on any parliament to form a government. In spite of many provocations and difficulties, we have honoured our commitments. This has included refusing to respond to the Taoiseach’s attempts over recent months to find an excuse to increase instability and undermine his own Government. There has been no talk from us about oiling printers or careless talk about elections in the middle of sensitive negotiations. This is why in October we took the unprecedented decision to state that we would not support an election until some certainty on Brexit had been reached at earliest. No one can now seriously question that our decision then was the right one for Ireland. This has ensured that we have been able to proceed with a detailed review of the implementation of the confidence and supply agreement. We refused to move straight to a negotiation and insisted on a deep review in critical areas, including health, housing, education, Brexit and public finances. Fianna Fáil’s participants in this review have detailed the outcomes for me and these have been reported to our parliamentary party. The review has unfortunately confirmed a complacency and lack of urgency in government. There is no understanding that the public has a right to be concerned at near-systematic failures to deliver on housing, health and many other issues. Equally there has been an attempt to stonewall us regarding basic information about fiscal reserves.

While the Taoiseach has announced that there is no problem with an unfunded €3 billion tax give-away, his Minister for Finance will not justify this claim. The chronic deficit in delivery, the failure to understand public concerns, and the increased politicisation of public funding points to the need for a new Government. In normal times, there would be no issue. An election now would be the right thing for our country. However, these are not normal times and Ireland is immediately confronted with one of the biggest threats for many decades. It is a threat which is not just of a short-term nature; it impacts on the core economic, social and political future of this island.

To replace this Government would require a lengthy election campaign and most likely a lengthy period of Government formation. In 2016, this entire process took four months to complete. Fianna Fáil is determined that the political chaos we see in London will not be allowed to spread to Ireland. We simply do not believe that the national interest could in any way be served by taking up to four months during next year to schedule and hold an election campaign and then form a government. With business and communities already fearful about the impact of Brexit and with Ireland manifestly not ready for many of the potential outcomes, how could it possibly be in the national interest to have extended political uncertainty next year?

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