The Chaos in Westminster will not be allowed to spread to Ireland
– Fianna Fáil will deliver stability through 2019 –
According to current legislation Brexit will take effect in 107 days. The deal on the table was reached after two years of tortuous and repetitive negotiations. It is a deal which reflects the commitments made by both the UK and EU to Ireland from late 2016 onwards.
It is a good deal for all involved. It would allow for an orderly transition period, it would reduce the short-term economic damage and it would allow time to develop a long-term model for cooperation.
But however good the deal is, a deal which will not or cannot be ratified ultimately becomes inoperable and worthless.
In the nearly three weeks since the deal was agreed we have all witnessed an escalating political crisis in London. It was the intention of the UK government to hold a vote last night. There is no prospect of another vote being scheduled for some time. There are many scenarios but unfortunately there is no clarity.
While Prime Minister May works to salvage the current deal she is confronted with a political class which has descended into open warfare between angry factions.
Today’s no-confidence motion is only the latest outbreak from a fundamentalist group in her own party that seem to be determined to destroy all around them rather than ever compromise.
Their extreme Europhobia has developed over forty years and it will not respond to evidence or reason.
It would be wonderful to be able to dismiss what is happening in London as a sideshow but we cannot. Ireland and Europe are directly impacted.
Whether or not Prime Minister May survives today the core blockage to any deal remains. There is currently an overwhelming majority of MPs standing against the Withdrawal Agreement but there is no route to a majority for any alternative course of action.
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.
And the fact is that this is at its core not about negotiations with the EU – it is about a debate within British politics and society which we have little or no influence on.
This period of growing chaos and uncertainty is not one we can assume will come to a halt by March 29th.
Whether or not 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.
And let no one be in any doubt, every single piece of evidence suggests that the impact of Brexit is underway 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 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’s 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, of course, 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.
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.
And 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 UK 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. 47% say they face serious difficulties at 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 doesn’t matter how efficient or dynamic your business is, a 25% loss of competitiveness is enormous and is an existential threat.
Yesterday, the Government announced that it will “ramp-up” preparations for a no deal scenario. This is the third such time this year that the government has announced such a ramping-up – yet the available evidence is that Ireland is nowhere near ready for a ‘no deal’ scenario.
This morning the Tánaiste detailed some preparations in the hope that they would impress us all. In fact his article leaves a very worrying impression.
He states that the Government “does not take ratification of the deal as a given”, however, it has taken this as a given in the Budget and in the fact that no Ireland-specific no-deal guidance has been issued.
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’s 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 can’t 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 cash flow 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 have had funding allocated or legislation published.
So 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 at earliest some certainty on Brexit had been reached. No one can now seriously question that our decision 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 & Supply Arrangement. 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 in relation to 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 requires 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?
This is why Fianna Fáil will extend a guarantee that government will be able to operate throughout 2019. This will allow the introduction of any emergency legislation and budgets, as well as the full end of year Budget and associated legislation. This will in turn allow the holding of an election early in the following year.
Free of Brexit uncertainty there can be an election about the need for a new approach to housing, about ending systematic political failures in health and about addressing the needs of people who want a government which understands their concerns.
This decision has been reached reluctantly but it is unavoidable.
We have all seen in Northern Ireland what happens when political parties undermine the functioning of government at a moment of critical risk. Northern Ireland’s position has suffered dramatically from political game-playing and the absence of a democratic voice.
The majority in Northern Ireland and in the Northern Ireland Assembly want to Remain and also support the current deal. Yet the absence of the Assembly and Executive has empowered people who believe the opposite.
In the next few weeks we will seek to finalise so far as this is possible, critical concerns which have been the focus of the review. Specifically:
- Actions required minimising the impact of a no-deal Brexit.
- The chronic under-delivery of commitments in health, housing and supports for children.
- The likely and potential state of public finances in 2019 and 2020.
- The unacceptable politicisation of public spending through the side-lining of expert agencies in funding decision in areas such as culture, rural affairs, local development and research.
If the government shows good faith this extension can be completed and ratified quickly.
Of course we cannot guarantee that the government will not undermine itself and stumble out of office, but it is receiving a guarantee of stability unprecedented for a minority government in its situation.
If we could have a new government in days then we would be able to act differently. But it will take a process of months and Ireland doesn’t have months which it can waste on putting politics before the people’s interests.
Tomorrow morning I will be meeting with colleagues from throughout the EU including eight members of the European Council. I will be telling them that Ireland will be a stable and reliable partner for them in the months ahead.
The contagion of political chaos will not spread here from London.
There is a clear majority in Dáil Éireann which will ensure stability and the national interest will be put first.