The Minister for Finance and Public Expenditure Paschal Donohoe has said €1.5 billion would be transferred from the Ireland Strategic Investment Fund into the Rainy Day Fund as he said the risk of a no-deal Brexit is now more likely.

The minister said he had originally also planned to transfer €500 million to the Rainy Day Fund from the Exchequer.

But he said he had decided not to transfer this €500 million, saying the decision was an "appropriate response to the more challenging economic environment."

Mr Donohoe said if the impact of a no-deal Brexit is more severe than forecast, he is prepared to use funds that would have otherwise been dedicated to the Rainy Day Fund.

He said this would ensure that the right supports are in place so that the economy is protected from the impacts of Brexit and will ensure that public services can be protected into the future.

He said the rationale of the Rainy Day Fund is to accumulate funding that can be used in the event of any adverse shocks to the economy.

The minister said given the small size of our economy the use of this funding is important to protect our economy.

The British Irish Chamber of Commerce has welcomed the approach taken by Minister Donohoe in the Budget.

"The approach taken by the Government to plan for a no deal Brexit is a prudent one that will best help protect business and trade in the uncertain days and weeks ahead," John McGrane, Director General of the British Irish Chamber of Commerce, said.

He said the group "specifically welcomes the establishment of the Brexit Contingency Fund".