Government provides in excess of €1 billion in Budget 2020 to respond to a No Deal Brexit
The Government is making more than €1 billion available in Budget 2020 to be spent in the event of a No Deal Brexit. The funding will be used to protect Ireland from the worst effects of a No Deal, so we can help the people and businesses most affected, if and when they need it. This is on top of existing grants and loans which are already available for business and agriculture, and is in addition to ongoing Government expenditure on Brexit preparedness.
The Government has been actively preparing for Brexit since before the Referendum in 2016.
In December 2018, the Government published a Contingency Action Plan for a No Deal Brexit, setting out actions which were being taken across a wide range of areas to prepare for a No Deal Brexit in advance of the March and April 2019 deadlines. In July 2019, the Government published an Updated Contingency Action Plan which outlined the further work across all sectors to further strengthen and refine preparations in the lead up to a potential no deal Brexit on 31 October.
Details of the Budget 2020 package were outlined by the Tánaiste and Minister for Foreign Affairs and Trade, Simon Coveney TD, and a number of his ministerial colleagues at a special Brexit press conference in Government Buildings this afternoon.
Speaking this afternoon the Tánaiste said:
Brexit remains the number one threat to the Irish economy, jobs and livelihoods. Whilst the problem is not of our making, the Government must continue to prepare for both a deal and a no deal outcome. Budget 2020 protects Ireland from the worst of No Deal and builds on the hundreds of millions that have gone into Brexit contingency in Budget 2019 and Budget 2018.
The Budget 2020 package includes:
- €650 million to support the agriculture, enterprise and tourism sectors and to assist the workers and regions which are most affected. This funding will be released in a series of waves, rather than all at once, to ensure an effective response to the wide range of possible Brexit impacts, which may take time to fully materialise. Of this €650 million, €220 million will be immediately deployed in the event of a No Deal Brexit with €110m for agriculture supports and €110m for enterprise supports. Second and subsequent waves will be released as the economic impact on particular sectors and regions becomes clear in the initial weeks and months. €40 million will be available to support the tourism sector, targeting the worst affected regions, as well as new marketing initiatives, on top of additional immediate funding of €7m in 2019.
- €365 million is also being provided for extra Social Protection expenditure on the Live Register and related schemes, while €45 million is provided for increased supports for workers in adversely affected parts of the country – for example the border region – should that prove necessary. These funding streams will lead to significant additional spend at local level in the areas most affected by Brexit. The scale of the contingency funding will also allow further specific initiatives targeting the most affected parts of the country. The Government will continue to work with trade unions and employer organisations to finalise these measures to support both companies and workers in the event of a No Deal Brexit. In addition, €355 million will be spent on on-going Brexit preparedness, compliance and activation supports. Of this, €185 million in current and capital funding will be used to ensure compliance conditions are met and trade disruption is minimised, including extensive investment in ports and airports infrastructure for a no deal Brexit, as well as funding for extra staff and other costs. A further €170 million will be spent on measures across a number of sectors to ensure that the State and economy are well positioned ahead of Brexit. These includes Brexit Responses and Global Ireland, assistance to enterprise, tourism supports, farm sector and competiveness supports. Assistance will also be available at the EU level for Member States most affected by Brexit. The Government is working in Brussels to seek additional financial support in the event of a no deal Brexit, including exceptional aid for Ireland’s agri-food sector and on other possible supports, such as through the European Globalisation Fund and the Solidarity Fund. Furthermore, there will be an increase of nearly €800 million in infrastructure investment in 2020 bringing total infrastructure spending to €8.1billion, as part of Project Ireland 2040. This investment in major projects like schools, roads and hospitals will help to create economic activity and jobs across the country. Further detail on specific Budget 2020 Brexit measures Agriculture€110 million will be provided through the Department of Agriculture, Food and the Marine in the initial wave of funding in the event of a No Deal Brexit. This will be supplemented by further exceptional aid, which the Government expects will be provided by the EU under the exceptional aid provisions of the Common Agriculture Policy. The provision of immediate supports for our beef sector will be a first priority, as will support for our fishing fleet. We also want to support food companies to re-orient towards new products and markets, and to support other sectors to improve their competitiveness. This will include:
- €85 million for beef farmers: First phase of a Market Support and Adjustment Aid: supports for farmers finishing cattle for slaughter
- €14 million for fisheries: First phase of a tie-up scheme for the most affected vessels
- €6 million for other livestock farmers and mushrooms sector: additional investment aid to improve competitiveness and increase environmental efficiency for these primary sectors
- €5 million for food and drinks processing industry: First phase of a Food Transformation capital investment scheme for large and SME food companies for product and market innovation; and additional supports for innovation in the prepared consumer foods and drinks sectors (in addition to funding from the Department of Business Enterprise and Innovation) Enterprise€110 million has been identified for the first wave of funding for targeted new interventions to help vulnerable but viable firms adjust to the new reality of a No Deal Brexit trading environment. The suite of initiatives will support firms of all sizes at all levels of difficulty (exporters and importers) with a particular focus on sectors most exposed, including food, manufacturing and internationally traded services. Support will be by way of grants, loans and equity investment. Specific new initiatives include:
- €45 million Transition Fund: grant, loan or equity for all firms with 10 or more employees in manufacturing and international traded services to help firms transition their business
- €42 million Rescue and Restructuring Fund: loan and equity for firms in all sectors with acute liquidity or insolvency problems to rescue the firm and support a restructuring plan
- €8 million Transformation Fund for Food and Non-Food: grant scheme supporting larger firms to transform their business with €5m for food (in addition to funding from DAFM) and €3m for non-food
- €5 million extra for Micro Finance Ireland: for firms with less than 10 employees (including self-employed), so MFI can increase competitive loans from €25,000 to €50,000
- €5 million Local Enterprise Offices Emergency Brexit Fund: repayable grants up to €50,000 to complement MFI support so total support available up to €100,000
- €2 million extra for Intertrade Ireland - to support cross border firms North & South
- €3million extra for Regulatory Bodies – for additional demands in market surveillance, accreditation and conformity assessment in NSAI, INAB, CCPC and HSA These are in addition to the wide range of supports already in place, including the €600m in Brexit-related loan schemes supported by the Exchequer. Budget 2020 includes a number of enhancements to existing tax-based measures which will support enterprise, SMEs and the agri-food sectors affected by Brexit including: Key Employee Engagement Programme (KEEP) – a share-based remuneration incentive to facilitate the use of share-based remuneration by unquoted SME companies to attract and retain key employees:
- Companies that operate through a group structure will be allowed to qualify for KEEP.
- Conditions for qualifying employees are to be broadened out to allow for part-time/flexible working and movement within group structures.
- Qualifying shares to include existing as well as new shares. Employment and Investment (EII) - provides individual investors with tax relief for risk capital investments in qualifying SMEs:
- Level of relief: Full income tax relief (40%) to be provided in the year in which the investment is made. This compares with current arrangements where 30% relief is provided upon the initial investment and a further 10% is given after Year 3 subject to certain conditions.
- Investment limit: The annual investment limit for investors will be increased from €150k to €250K per annum and to €500k per annum in the case of those who invest for a minimum period of 10 years. Research and Development Tax Credit – allowing companies carrying out research and development to claim tax relief:
- The R&D credit is being amended for micro and small companies to increase the 25% R&D credit to 30% and to enhance the existing limits on the payable credit.
- A new provision is being introduced to allow micro and small companies conducting pre-trading R&D to claim the credit before trading commences, limited to offset against VAT and payroll tax liabilities only.
- In respect of all claimants, the current limit on outsourcing to third level institutes of education will be increased from 5% to 15%. This will support R&D activities in both companies and third-level institutions. Supports for workers affected by Brexit €45 million has been provided in Budget 2020 for additional activation measures to provide increased support to ensure an effective and efficient 'first responder'/triage and client management approach and supports available for businesses and workers in difficulty. The key objective of the cross-departmental effort is to ensure that employers and employees in vulnerable companies can avail of supports to help work through business recovery options to sustain their business. In order to sustain incomes and keep employees in firms as they try to work through how their business can remain viable, the Department of Employment and Social Protection will fully resource a Short-Time Work Support Scheme to provide an opportunity for employers to retain skilled labour in a reduced capacity and avoid permanent lay-offs and associated redundancy costs. The National Training Fund is being further supplemented in Budget 2020 which, coupled with new flexibilities in training services, will ensure tailored training and upskilling for workers can also be deployed. Tourism The tourism sector has already begun to feel the effects of Brexit, with a reduction in revenue from British visitors since the UK referendum, primarily as a result of the weakening of Sterling. €40 million will be available to support Tourism in the event of a No Deal Brexit. This funding will be focused on:
- The regions that will suffer most from a no deal Brexit, such as the Border counties and the South-East;
- Targeting the British market, through Tourism Ireland. Our tourism agencies will ramp up cinema, radio and online advertising. In addition, our agencies will work with and support the tourism industry here to ensure they can effectively promote their products to consumers in Britain;
- Dedicated promotions in other key markets such as North America, Europe and key Emerging Markets aimed at touring and regional holidays;
- Encouraging direct access into our regional airports and ports from overseas markets;
- Domestically, Fáilte Ireland working to support tourism enterprises through the Brexit Response Programme. Fáilte Ireland will undertake marketing initiatives to increase short breaks by domestic visitors, including through the promotion of festivals and events such as Taste the Island and Púca, the new Halloween festival. The Government will also provide immediate additional funding of €7 million in 2019 to support accelerated tourism marketing initiatives aimed at mitigating the impacts of Brexit. This will allow Fáilte Ireland to undertake additional domestic marketing of Winter breaks and Tourism Ireland to increase their communications programme in all markets targeting an increase in passenger numbers on existing regional services. Background Information – Preparations for No Deal Brexit The Government has been actively preparing for Brexit since before the Referendum in 2016. In December 2018, the Government published a Contingency Action Plan for a No Deal Brexit. This set out the actions which were being taken across a wide range of areas to prepare for a no deal Brexit in advance of the March and April 2019 deadlines. In July 2019, the Government published an Updated Contingency Action Plan which outlined the further work across all sectors to further strengthen and refine preparations in the lead up to a potential no deal Brexit on 31 October. This work includes:
- passing the ‘Brexit Omnibus Act’ and preparing associated secondary legislation;
- investing in physical and ICT capacity at our ports and airports, and recruiting over 750 additional staff;
- hosting over 2,800 high level engagements and stakeholder consultations on Brexit;
- contacting over 102,000 businesses that traded with the UK in 2018 and 2019;
- businesses registered for EORI numbers now represent 90% of the value of import trade, and 97% of the value of export trade with the UK in 2018;
- providing a wide range of business supports for enterprise and the agri-food sector;
- providing training and financial supports (including payments of up to €6,000 per new employee) to increase customs intermediary capacity;
- ongoing work to facilitate the continued use of the Landbridge by Irish traders;
- working to ensure people in Northern Ireland can access benefits like those of EHIC and ERASMUS;
- delivering a broad range of TV/radio/print/social media awareness and information campaigns for business and citizens. These campaigns will continue in the run up to 31 October. In parallel:
- both the Irish and British governments have committed to maintain the Common Travel Area in all circumstances;
- the European Commission has outlined contingency measures for a no deal scenario in areas such as air connectivity and international road haulage;
The Irish Government has engaged in detailed discussions with the European Commission on measures in relation to the North-South Border in a no Deal Brexit, with the shared objectives of protecting the Good Friday Agreement, as well as the integrity of the Single Market and Ireland’s place within it.