Ireland to base next budget on assumption of No Deal Brexit

Ireland will base its next budget on the assumption Britain WILL crash out of the EU without an agreement – but Angela Merkel says there is ‘every chance’ Brexit will be ‘sorted out’ by October 31

  • Boris Johnson is facing a five-week scramble to get a Brexit deal with the EU
  • EU leaders split on the prospects of a Brexit agreement being agreed by Oct 31 
  • Angela Merkel said there is ‘every chance’ Brexit will be ‘sorted out’ on time  
  • But Spanish PM Pedro Sanchez said No Deal now the ‘most likely scenario’
  • Ireland said today its 2020 budget will be based on the assumption of No Deal 

Ireland will base its budget for 2020 on the assumption that there will be a No Deal Brexit, Dublin confirmed today, as European leaders were split on whether Britain and the EU will strike an agreement by October 31. 

The budget, due to be delivered next month, will see funds set aside to help out vulnerable sectors of the Irish economy which could be hit hardest by a bad break. 

Finance Minister Paschal Donohoe also said that the Irish public finances would be allowed to run at a deficit in order to cushion the potential damage of a No Deal. 

It came as German Chancellor Angela Merkel gave Boris Johnson a Brexit boost but Spanish Prime Minister Pedro Sanchez predicted Britain would split from Brussels without an agreement. 

Mrs Merkel said there was ‘every chance’ that Brexit will be ‘sorted out’ by the current Halloween deadline.  

Asked in the Bundestag for her view on the prospects for Brexit, Mrs Merkel said: ‘There is every chance to get it sorted out.’ 

But Mr Sanchez struck a much more pessimistic tone as he said that the EU should not make any further concessions to the UK and predicted a No Deal split.

He said: ‘A hard Brexit, without an agreement, has become the most likely scenario. It is not possible to make other concessions.’ 

The comments came amid claims Mr Johnson is ready to compromise on his Irish backstop demands. 

Aides are believed to be examining proposals for arrangements that would apply only to Northern Ireland, rather than aligning the whole UK with EU market rules. 

That could raise tensions with the DUP, which has insisted it will not accept anything that risks splitting the union.

Today it emerged that Leo Varadkar, the Irish PM pictured alongside Boris Johnson in Dublin on Monday, will proceed with a budget for 2020 which is based on the assumption of a No Deal Brexit

Angela Merkel, pictured in the Bundestag today, delivered a boost to Mr Johnson as she said there is ‘every chance’ Brexit will be ‘sorted out’

The fact that Dublin is now proceeding on the assumption that Britain will crash out of the bloc illustrates the seriousness with which the EU is taking the possibility that the two sides may be unable to strike an agreement. 

There has been a feeling on both sides of the Channel that ultimately a deal will be done. 

But the Irish budget decision suggests that optimism of an accord being agreed is evaporating.  

Ireland presented two budget strategies for 2020 back in June this year. 

Its preferred option was based on the UK leaving the EU in an orderly fashion while the other was based on a No Deal scenario. 

Mr Donohoe said today: ‘Given the uncertainty and lack of clarity regarding the timing and format that the UK’s exit will take, preparing for a No Deal scenario is the most sensible approach.

‘This is therefore a budget that will be a safe budget, a careful budget. It will focus on ensuring that we have the resources we need at a time of change, to help our country get ready for a shock that may occur at the end of October or in a number of other scenarios across 2020.’

The Irish economy is expected to flat-line next year in the event that there is a No Deal Brexit. 

It has been forecast to grow by 3.3 per cent if there is an orderly withdrawal. 

Mr Donohoe said in June that he would therefore allow the public finances to run a deficit of between 0.5 and 1.5 per cent of Irish GDP if there is a No Deal split to cushion any hit to the economy. 

Irish Finance Minister Pascal Donohoe said today the next budget would be based on the assumption of a No Deal Brexit

His comments came amid growing speculation that Mr Johnson is pursuing a backstop compromise in a bid to improve the chances of a deal with Brussels. 

He previously stated that he was seeking a ‘backstop-ectomy’, to remove the controversial provision from the Withdrawal Agreement altogether.

However, the premier’s options are looking increasingly limited, after Parliament passed a law effectively banning No Deal at the end of October, and refused his call to trigger an early general election.

Meanwhile, the EU is sceptical the UK will be able to come up with a good enough alternative to the backstop to allow it to be scrapped.  

Mr Johnson reportedly told Remainer rebels he is expecting ‘spears in my back’ from so-called ‘Spartans’ in his own party. 

Mr Johnson now has just five weeks to secure an agreement with the EU, or break his ‘do or die’ vow to take the UK out of the bloc by Halloween.

The only other plausible option appears to be resigning before October 19, when the law requires him to beg the EU for an extension. 

What happens next in the Brexit crisis? 

Boris Johnson and Jeremy Corbyn are drawing battle lines for an election after Parliament was prorogued.

But the poll might not be triggered for at least another month – and the date of the ballot is likely to be well into December. 

Here is how the coming weeks could pan out: 

September 14-18: Lib Dem conference takes place in Bournemouth 

September 21-25: Labour conference in Brighton 

September 28-October 2: Tory conference takes place in Manchester, with Mr Johnson giving his first keynote speech as leader on the final day. This will be a crucial waypointer on how Brexit talks are going.

October 14: Parliament is due to return with the Queen’s Speech – the day before Mr Johnson had hoped to hold a snap election.

October 17-18: A crunch EU summit in Brussels, where Mr Johnson has vowed he will try to get a Brexit deal despite Remainers ‘wrecking’ his negotiating position. 

October 19: If there is no Brexit deal by this date Remainer legislation obliges the PM to beg the EU for an extension to avoid No Deal.

October 21: Decisive votes on the Queen’s Speech, which could pave the way for a confidence vote. 

October 31: The current deadline for the UK to leave the EU. 

November/December: An election looks inevitable, but Labour is hinting it might push the date back towards Christmas to humiliate the PM. 

The premier held out an olive branch to Conservatives who are deeply unhappy at his decision to expel 21 MPs who rebelled on Brexit from the party. They included eight former Cabinet ministers.

Amber Rudd quit the Cabinet and the Tory whip over the weekend in protest at the draconian move. 

But the PM is understood to have told ministers yesterday that he was the ‘most liberal Tory PM in decades’, denying the party was lurching to the extremes.  

According to the Sun, Mr Johnson told Remainer rebels during talks that he would need their support on Brexit soon.

‘The spears in my back won’t be from you, they’ll come from the Spartans,’ he said. 

Steve Baker, head of the Tory Eurosceptic ERG group, today tweeted cryptically about previous comments by Dominic Cummings that ‘politics involves very similar tragi-comic scenes re-created by some of the basic atoms’. 

The idea of a Northern Ireland-only backstop was floated by the EU more than two years ago, but rejected by Theresa May as something no UK PM could accept. 

The Prime Minister held talks with the DUP last night, with leader Arlene Foster and her deputy Nigel Dodds spending more than an hour inside Downing Street.

They seemed to have been reassured. Speaking afterwards, Mrs Foster said the PM demonstrated his ‘commitment to securing a deal which works for the entire United Kingdom’ as well as Ireland.

She made clear he had ruled out a full Northern Ireland-only backstop – but appeared to leave some wriggle room for an alignment with the Republic on agriculture and regulations.  

Today Mr Johnson said he would not agree to a Northern Ireland-only backstop. 

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