Ireland’s 2021 budget will be prepared on the basis that Brexit trade talks between Britain and the EU will fail, the government in Dublin said Wednesday.
A finance department statement said the government agreed to base the October 13 budget “on the assumption of a disorderly Brexit” that would see UK-EU trade reverting to World Trade Organization (WTO) terms next year.
Prospects of Britain securing a trade accord with the EU by the end of this year have faded in recent weeks, as London made moves to rewrite its withdrawal treaty already signed with Brussels.
Leaders of the 27 remaining EU member states have warned the unilateral action, which London openly admits would breach international law, undermines confidence in the talks.
European Commission president Ursula von der Leyen said Wednesday that “with every day that passes, chances for a timely agreement do start to fade”.
Both Britain and the EU accept a deal must be reached by mid-October to allow it to be ratified before January 1 next year.
Ireland is the only nation in the EU bloc that shares a land border with Britain, along the 310-mile (500-kilometre) boundary with British-run Northern Ireland.
Trade ties and supply chains between Britain and Ireland are deeply enmeshed.
If exchanges with Britain revert to WTO terms, the flow of trade from the Republic could be stemmed by regulatory costs and steep tariffs.
The Central Bank of Ireland warned in February that Ireland’s overall economic output could shrink by five per cent in that scenario — leaving the nation reeling from the twin blows of Brexit and the coronavirus, which has already ravaged the economy.