What does Budget 2020 mean for Brexit and trade?

08 October, 2019

Preparing for Brexit remains a priority

  • Budget 2020 has been drafted by the Minister "in the shadow" of a no-deal Brexit. The potential impact of the UK's withdrawal from the European Union was the overarching theme of this year’s Budget, with a significant amount of funding announced to minimise the impact of Brexit on the Irish economy.
  • €1.2 billion of targeted funding for businesses and key state agencies was announced by the Minister. Additional funding may be made available through the Rainy Day Fund if the impact of a no-deal Brexit is greater than anticipated.
  • Supports and funding to be made available are designed to assist state agencies, private businesses and Irish citizens. 
  • The Minister highlighted the potential risk of a no-deal Brexit to the Irish economy with respect to a reduction in the rate of job creation and a potential slower pace of growth within the Irish economy.
A vector illustration of an EU flag and a UK flag pointing in opposite directions.

The imminent arrival of Brexit on 31 October, compounded with the lack of certainty regarding the future Irish-UK trading relationship, is causing real challenges for Irish business’ ability to prepare. The Government’s commitment to making support available to Irish business through the provision of additional funding and schemes are welcome, and I would encourage Irish companies to continue to prepare for a no-deal Brexit.

In advance of today's announcements, it had been well flagged by the Government that Budget 2020 would be drafted based on a no-deal Brexit. The decision by Minister Donohoe in September has meant that today's Brexit Budget has come as no surprise. 

While current events have created much media interest, the progress of negotiations between the UK and the EU are ongoing. With limited signs of development, we will look on with interest over the coming days on whether there will be agreement on next steps.

Today, Minister Donohoe emphasised the impact that Brexit will have on the Irish economy, commenting that "this is a Budget without precedent". He also re-emphasised that the Government's central planning assumption is that of a no-deal Brexit. He summarised the Government support currently available to Irish companies trading with the UK. 

In last year's Budget, Minister Donohoe announced spending in advance of Brexit. These included: 

  • €300 million for the Future Growth Loan Scheme
  • €110 million for Government departments to prepare for Brexit
  • €60 million for the agricultural industry to use for capital support 
  • €587 million on improving infrastructure in Dublin, Shannon and Cork ports 

It is, therefore, welcome to see the Minister announce a further €1.2 billion package of potential funding ahead of Brexit. It provides targeted support to businesses operating in the most impacted sectors and regions. There is particular emphasis on the agri-food sector, as well as significant funding to protect employment. 

The package announced by the Minister includes the immediate expenditure of €200 million to increase the level of staffing and upgrade infrastructure at the ports and airports, including investment in IT and facilities management. Further, funding of approximately €1 billion in the case of a no-deal Brexit will be used to support key state agencies and businesses in the most exposed sectors, including food, agriculture and fisheries, tourism, food and drink processing, manufacturing and internationally traded services.

While businesses may look to the Government to provide further support, given that Ireland remains part of the EU and the Single Market, Minister Donohoe is restricted in what measures he can introduce from a customs and trade perspective. Customs and trade are competencies of the EU and, as such, the Government cannot introduce special trade arrangements between Ireland and the UK. 

Separate to the Budget, earlier this year the Government announced its intention to introduce measures in the Withdrawal of the United Kingdom from the European Union (Consequential Provisions) Act 2019. The act eases the cashflow burden for businesses importing into Ireland after Brexit. These measures included postponed accounting for import VAT.

Brexit Preparation

As Minister Donohoe concluded his Budget 2020 speech, there remains uncertainty as to the final Brexit outcome. It was paramount that the Minister presented a Budget that would protect our economy against the significant disruption that a potential no-deal Brexit may cause.

While the Brexit outcome is unknown, I would echo the Minister and strongly encourage businesses who trade directly or indirectly with the UK to continue to prepare for the worst-case scenario. They need to take action now to ensure that trade will continue post-Brexit. 

I recommend that before 31 October, you assess your business readiness and consider what supports may be available for your business. It is also essential to complete the following no-risk Brexit actions: 

  • Engage with customers, suppliers and employees to build trust and confidence ahead of what may be a stressful time ahead
  • Secure relevant customs and trade registrations and authorisations (e.g. EORI, Deferred Payment) and regulatory compliance requirements (e.g. financial services)
  • Engage with external stakeholders such as Customs Brokers to ensure that those stakeholders are 'Day One'-ready to support your business

Other customs and trade measures in Budget 2020

Excise Duty on cigarettes

As with many of the recent Budgets, excise duty on cigarettes will increase by 50 cent on a pack of 20, with a pro-rata increase on other tobacco products.

Carbon Tax

The carbon tax is currently €20 per tonne of CO2. The Minister restated the Government's intention in the Climate Action Plan to increase the overall price of carbon to €80 per tonne by 2030. As a step towards reaching this target, it was announced in Budget 2020 that there would be an increase of €6 per tonne. This will raise an additional €90 million for the Government in 2020. The increase will apply to auto fuels from midnight on 9 October and will be delayed until May 2020 for other fuels.

To mitigate the increased fuel cost to hauliers, the Minister has provided for an additional relief through the Diesel Rebate Scheme.


The Minister has also announced a change to the 1% diesel surcharge introduced last year. This will be replaced by a nitrogen oxide emissions-based charge and will apply to all passenger cars registered for the first time in the State from 1 January, 2020. The charge will apply on a euro per milligram/kilometre basis. The rate will increase in line with the level of nitrogen oxide emitted. 

The relief from VRT for electric, hybrid-electric and plug-in hybrid electric vehicles has been extended until the end of 2020. 

The Minister also announced a reduction in qualifying CO2 thresholds for reliefs in respect of VAT reclaim on commercial vehicles.

Electricity Tax

The Minister also announced the equalisation of electricity tax rates for business and non-business use. This measure was introduced based on a recommendation in the Climate Action Plan. Further information is expected in the Finance Bill.

Betting Tax

Further to the increase in betting duty and betting intermediary duty announced by the Minister in last year's Budget, the Minister has introduced relief from these duties for small independent bookmakers up to a limit of €50,000. This relief is subject to State Aid approval.

“I would echo the Minister and strongly encourage businesses who trade directly or indirectly with the UK to continue to prepare for the worst-case scenario.”

John O'Loughlin — PwC Ireland

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John O'Loughlin

Partner, PwC Ireland (Republic of)

Tel: +353 1 792 6093

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