Ireland now has no choice but to assume the UK and the EU won't sign a trade deal, an Irish minister said.
The UK government's attempt to override elements of the take-back agreement through domestic law has increased the likelihood of a no-deal, public spending minister Michael McGrath admitted.
Finance Minister Paschal Donohoe shared this view when the couple set out their government's strategy for next year's budget.
The economic impact of the UK's exit on World Trade Organization trading conditions and the ongoing costs of the Covid-19 pandemic feed into a budget outlook that projects a deficit of up to 19 billion euros (£ 17 billion), or 5.5% of GDP – in 2021.
Mr McGrath said the 2021 budget, which will be released next month, would allocate significant resources to the sectors that will be hardest hit by a no-deal.
But he added: "There is nothing the Irish government can do to match the disruptive effects of a no-trade-deal Brexit on our economy."
“We therefore sincerely hope that the sense will prevail and that an agreement will be reached. However, from a budgeting point of view, the only reasonable assumption to be made at this point is that no agreement will be reached in the next few weeks.
“It is in everyone's interest that this scenario be avoided, but it is not directly within our control. Given what has happened over the past week or two, I think we have no choice but to assume there won't be a deal. "