The Taoiseach has insisted there will be no need for an emergency budget if the UK crashes out of the EU without a deal.

UK Prime Minister Theresa May returned from a tense EU Leaders Summit yesterday with little to show for her efforts to secure “legal assurances” on the Irish border.

EU leaders assured Mrs May that the backstop preventing a return to a hard border in Ireland will be temporary – however the assurances are not legally binding.

The ongoing impasse has stoked fears the UK could be heading for a ‘no deal’ exit – and the Fianna Fáil leader Micheál Martin has warned that a second emergency budget may be required to deal with the economic consequences.

It's after an ESRI report said the worst case scenario could leave a €4bn hole in the Irish budget

Emergency budget

Speaking after the summit yesterday, Leo Varadkar said he doesn't believe a second budget will be needed.

“There analysis was that even in a no deal hard Brexit scenario, the economy will continue to grow,” he said.

“Instead of growing by 6% it will grow by 3%.

“The kind of environment in which you have mini-budgets or emergency budgets is when you into a serious recession – not when your economy grows by 3%.

“We are confident that we won’t have to have a new budget in any circumstances next year – and that we are well prepared for it.”

Backstop

At the summit, EU leaders again warned that talks on the Brexit Withdrawal Agreement – and the legally binding backstop it contains – cannot be reopened.

Mr Varadkar said the assurances given to Mrs May are as good as a legal guarantee.

“Conclusions from a European Council meeting are serious stuff,” he said.

“They carry a lot of weight and we mean them, so they certainly have depth and meaning.”

People's vote

The deadlock has reportedly encouraged a number of senior UK Government Ministers to begin considering the possibility of a second Brexit referendum.

The Times newspaper reports that David Lidington, David Gauke, Amber Rudd, Philip Hammond and Greg Clarke have stepped up talks over the possibility of a so-called ‘People’s Vote’ – and what question might be put to the people.

Meanwhile, other senior Tories - including former chancellor Ken Clarke - have urged Mrs May to reach out to Labour backbenchers in a bid to find common ground to move forward.

His call has been echoed by Work and Pensions Secretary Amber Rudd, who has urged fellow Tories to be prepared to reach across the political divide to avoid the UK "crashing onto the rocks" without a deal.

Mrs May is due to give an update on the Brussels summit to the House of Commons on Monday.