DÁIL QUESTIONS WITH THE MINISTER FOR FINANCE ON BREXIT

  1. Deputy Thomas P. Broughan asked the Minister for Finance his Department’s current entitlements regarding the way Ireland’s contributions to, and funding supports from, the European Union will change following Brexit; and if he will make a statement on the matter. [9541/17]

Deputy Thomas P. Broughan: The United Kingdom is a few weeks away from the triggering of Article 50. I asked the Minister about this issue in the past. Obviously, the second largest net contributor to the European Union will be leaving, which will result in some residual costs and contributions. As a result of the 2015 revision of our GDP statistics, we were due to pay perhaps an additional €300 million this year. Has the position on our EU contribution become any clearer?

Deputy Michael Noonan: I thank the Deputy for his question. Until it formally withdraws from the European Union, the United Kingdom will remain a full EU member with all its existing rights and obligations, including in regard to the EU budget. Brexit will involve complex discussions on the multi-annual financial framework, particularly as the United Kingdom is an important net contributor to the EU budget. Therefore, Brexit will have a significant impact on EU budget funding and expenditure and may need to be mitigated by increased contributions from other member states, reductions in EU funding programmes or a combination of both.

While my Department has undertaken some broad modelling work to estimate the potential impact of Brexit on our EU budget calculations, this analysis will need to be developed in more detail in the coming period, when the parameters of the budget negotiations are better defined. In particular, a key point will be getting agreement among the EU 27 on a common approach to the future of the EU budget.

Deputy Thomas P. Broughan: The Committee on Budgetary Oversight has been discussing with the Governor of the Central Bank and the Economic Statistics Review Group the new concept of GDI, an attempt to measure many variables and engage in supplementary analysis in regard to GDP. Given what happened in 2015, are we not left in quite a vulnerable position? Our basic contribution this year is approaching €2.5 billion. This is a considerable amount of funding that we must provide. With regard to the revision of our statistics in 2015, are we considering very deeply the consistent impacts on the reduced EU budget given the exit of the United Kingdom?

Deputy Michael Noonan: Our contribution to the EU budget is calculated on our GDP, as calculated by EUROSTAT. The modifications suggested by the committee under the Governor of the Central Bank to have a more transparent domestic set of numbers which would not have built in the impact of the on-shoring of IT, which ran into the GDP figures, would not be taken into account for calculations on the EU budget. The United Kingdom is a net contributor so it stands to reason that, if it moves out, the pool will be smaller by the difference between what it gets and what it contributes. A question arises as to how the adjustment will be made. Either every member state will have to pay more or the budget will be reduced by pulling back on certain services that are now funded through the EU budget. The other variable is the amount of compensatory funds upfront for which the United Kingdom will be liable. Calculations indicate this could be from as low as €33 billion or €34 billion up to over €60 billion. That would go into the pool also. It is impossible to say except that the issues the Deputy raises in his question are real and must be resolved in the course of the negotiation over the next four, five or six years.

Deputy Thomas P. Broughan: When does the Minister expect to get the revised figures, the GNI analysis? How will it operate in terms of international standards? In this regard, the Minister mentioned EUROSTAT. Also to be considered are the IMF and other bodies given the considerable impact Brexit will have on our unique economy.

Has the Minister taken any position on the long-standing liabilities the United Kingdom will have? We hear about the pension entitlements of British staff working as EU civil servants to the year 2050, etc.

Deputy Michael Noonan: There are estimates generated in Brussels that would be at the higher end of the range. These are rejected and refuted by the UK authorities. Where it will land, I could not even guess at this stage.

On the new methodology, as advised by the committee on Irish statistics, the intention is not to change the statistical base for our international calculations, as with the EU budget. The idea is that there will be a set of numbers with statistical aberrations taken out so foreign direct investors, the markets or colleague countries that trade with us will have a more realistic insight into the reality of the Irish economy rather than looking at GDP figures which, while they are real under the calculations required by EUROSTAT, we all agree do not reflect real economic activity in the country.