Ireland’s Donohoe calls for Brexit negotiators to redouble efforts

Irish Finance Minister Paschal Donohoe said Brexit negotiating teams should redouble their “creativity and commitment”

Irish Finance Minister Paschal Donohoe said Brexit negotiating teams should redouble their “creativity and commitment” in order to reach an agreement before the end of the year, with officials and governments currently preoccupied by the coronavirus pandemic.  

Donohoe told CNBC Friday the importance of the EU-U.K. talks have been heightened by the global economy being gripped by Covid-19 developments in the last few months.

“It’s so important that all of us redouble our efforts and redouble our creativity and commitment to see if a pathway for an agreement can be found because the impact of a very, very hard Brexit on all participants in global trade, of course, is only going to be heightened if we are already dealing with the consequences of Covid-19,” he said.

Talks faced another setback last week after Ireland’s European Commissioner Phil Hogan, who was responsible for trade, resigned amid a “Golfgate” scandal. Meaning the EU’s negotiating team will be undergoing a shift in the crunch weeks ahead.

Donohoe said the negotiations will continue under the leadership of chief Brexit negotiator Michel Barnier, as the next Dec. 31 deadline looms, despite the recent upheaval.

“There still will be a very strong team within the European Commission, and between Mr. Barnier, the Commission and the new commissioner, whoever that is, I’m confident that the work of the Commission will continue to the very high standard that it did under Commissioner Hogan.”

‘Golfgate’

It has been a rocky couple of weeks for the Irish government with “Golfgate,” a controversy over a dinner held by the parliamentary golf society in a hotel earlier in August that drew public ire. More than 80 people from government and industry gathered for the dinner, on the same week that some Covid-19 restrictions were imposed again on the public.

As well as Hogan, Ireland’s Agriculture Minister Dara Calleary resigned after the news broke that he attended.

With Hogan out, Ireland is now under pressure to present two candidates for the EU commissioner job with several names swirling around as possible picks. But doubts remain on whether that person will maintain the trade portfolio.

Irish Finance Minister Paschal Donohoe at the World Economic Forum’s annual conference in Davos, Switzerland, on January 26, 2018.

Simon Dawson | Bloomberg | Getty Images

European Commission President Ursula von der Leyen, who heads up the EU’s executive arm, said she wants to be presented with one man and one woman as candidates for the job as part of her efforts for a gender-balanced Commission.

Irish Foreign Affairs Minister Simon Coveney, who has been a familiar face among Brexit negotiations, and Mairead McGuinness, a member and vice president of the European Parliament, are names touted for the role.  

Domestic challenges

Closer to home, Donohoe faces mounting challenges in rebooting the economy as the average number of daily infections has risen, which has led to the re-introduction of some restrictions.

The Employment Wage Subsidy Scheme comes into effect this week. It is a revamped version of the Temporary Wage Subsidy Scheme, which covered some employers’ wage bills to prevent job losses and was introduced in March as the pandemic took hold. The scheme has cost the state more than 2.7 billion euros, according to the country’s tax agency.

Many areas of the Irish economy have re-opened during the summer but others are still hobbled. Pubs — who do not serve food — were due to re-open on Aug. 31, after a number of delays in the lockdown easing schedule, but publicans’ hopes were dashed once again.

An industry group for pubs flagged issues with the new wage subsidy scheme, saying that it will exclude some part-time workers and that this will make it unviable for some pubs to re-open if they are unable to retain that staff.

On Friday, the government announced an additional 16 million euro support package for pubs, but this was dismissed as a “paltry gesture” by industry groups.

These are all challenges that Donohoe will have to contend with as he examines the books ahead of  the budget statement in October, which will take stock of the measures announced in July’s stimulus package and plot the way forward.

International pressure on tax lingers too. Donohoe said that it’s still possible talks of an accord on digital tax at the OECD level can pick up again in 2020.

“I expect to see that process reactivated later on in the year, and while I think some kind of agreement is possible in 2020, my own view is that it would be more likely that you would see some of this work conclude in the early part of next year,” he said.

Any change on how big tech companies are taxed would impact Ireland, which is the home of many regional bases for large tech firms.

“I think it is incumbent on all of us to try to find ways of making progress on tax issues without it heightening trade difficulties that are already there,” he added.

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