Government to frame Budget on basis of no-deal Brexit

The Government will frame next month’s Budget on the basis of a no-deal Brexit and will not bring in any major taxation increases, Minister for Finance Paschal Donohoe has confirmed.

At a briefing outlining the strategy behind next month’s Budget, Mr Donohoe said Budget 2021 will focus on providing further fiscal support to the coronavirus-hit economy.

He said the Cabinet had agreed that broad-based increases in taxation would be counter-productive at this stage and there would be no change to income tax credits or bands, USC or PRSI.

“There is a heightened air of economic uncertainty and this Government wants to give confidence to those who are earning income or who have a high level of deposits within our economy for this year and for next year,” he said.

Minister for Public Expenditure Micheal McGrath, however, declined to rule out changes to pension and welfare rates.

Both ministers confirmed that the Budget would be based on the assumption that a free trade agreement between the EU and the UK would not be agreed before the end of the year and that from the beginning of next year bilateral trade between the two would be on World Trade Organisation (WTO) terms.

This could result in the imposition of tariffs on Irish exports to the UK with the food and drink sector here particularly exposed.