No-deal Brexit will slow Irish economy, Varadkar warns

A no-deal Brexit will slow the Irish economy, Leo Varadkar has warned.

But the Irish premier vowed there will be no return to the austerity measures which the country faced following the 2008 recession.

Speaking to British and Irish business leaders in Dublin, the Taoiseach said recent chaos in UK politics had led him to fear a “significant and growing risk of no-deal”.

“Recently Prime Minister Johnson and I spoke by phone. We shared our perspectives on the Withdrawal Agreement and agreed that our teams would establish one-to-one contact,” Mr Varadkar said.

“We will meet again in Dublin on Monday. Unfortunately, given political developments in the UK, there is a significant and growing risk of no-deal.

“We don’t wish to see a no-deal Brexit and we will continue our efforts to avoid one, but not at any cost. Unlike some, I see no upsides to no-deal. I do fear it. But I am prepared for it.”

The Taoiseach told a British Irish Chamber of Commerce dinner on Thursday he believes a no-deal Brexit will slow the Irish economy, but vowed there would be no return to austerity.

“A no-deal Brexit will have adverse effects on our economy, causing growth to slow, but it will grow and we don’t anticipate a return to recession,” he said.

“Unemployment will rise but total employment will also continue to rise, albeit at a slower rate. There will be more people at work.

“The public finances will go from surplus to deficit but a deficit of less than 2%, so better than our long run average.

“We do not anticipate pay cuts, income tax increases or reductions in overall public spending.

“There will be no return to austerity, we won’t be taking that trip again.”

In the event of a no-deal, Mr Varadkar said the common travel area will remain in place across the UK and Ireland.

“Irish and dual British-Irish citizens in Northern Ireland and Britain will still be able to travel, work, do business and study throughout the EU without a visa or permit. For British only citizens, this will no longer be the case,” he said.

“While medicine shortages occur from time to time, we do not anticipate any significant change in medicines supplies. There will still be plenty of food on shelves but perhaps not all of the same brands.

“When you fly into Ireland from Britain, you will no longer pass through the blue channel. You will have to choose the green or red one and pay any taxes that may be due.

“The same will apply to products bought online from the UK, brought in from Northern Ireland, and EU consumer protections will no longer apply.

“Flights, trains and buses will continue to operate normally for a period but an agreement will be needed for this to continue permanently. EU vessels will no longer be allowed to fish in UK waters and vice versa, though the Commission has proposed a short extension of the status quo.

“Tariffs will apply to goods imported into Ireland from the United Kingdom and vice versa.

“There will be checks on goods and live animals and, as far as possible, they will take place in ports, airports and at businesses. But some may need to take place near the border.

“We are working out the details of this with the European Commission.”

The Taoiseach added that whatever happens the UK will “remain a vital trading partner”, noting billions of euros worth of exports and imports between the two nations in 2018.

“The UK is geographically and culturally our closest neighbour and will continue to be a vital trading partner, no matter what shape Brexit takes,” he said.