Tuesday 17 October 2017

Irish businesses 'will need up to €400m a year' to offset hard Brexit

Ibec’s Danny McCoy
Ibec’s Danny McCoy
Colm Kelpie

Colm Kelpie

Up to €400m in State and EU supports will be needed annually to allow Irish businesses to mitigate the fallout from a hard Brexit, the country's biggest business body has argued.

Ibec said funds must be provided to support firms in sectors exposed to the UK to innovate, diversify into new markets, train staff and invest for a future with the United Kingdom outside of the European Union.

In a policy document published today to mark the first day of formal Brexit negotiations, the business group warned that a temporary form of EU State aid needs to be provided to support companies, while an EU fund designed to help people who have lost their jobs due to globalisation needs to be reformed to help businesses deal with the economic fallout from Brexit.

Ibec director general Danny McCoy said the closest possible relationship between the UK and EU is in everyone's interest.

"If the UK crashes out of Europe, Ireland will need all the policy levers available to respond. State aid will be needed to support companies through any period of adjustment, and tax and labour market policy will need to ensure Ireland remains internationally competitive," Mr McCoy said.

"A post-Brexit EU must take full advantage of Europe's collective strength and influence, but not limit the capacity of member states to respond quickly to external shocks."

The report sets out five principles which Ibec states must inform the approach to negotiations - the need for a smooth exit, comprehensive transitional arrangements, the closest possible future relationship, addressing the unique Irish challenges, and ensuring a prosperous and competitive future EU.

"Practical" solutions have also been made in key areas including customs and ensuring technology is used to minimise disruption and staff are adequately trained, ensuring the freest of trade continues, the common travel area, single market and regulation, and alleviation measures.

Brexit is already impacting businesses in the export sector. Goods exports plummeted by almost half-a-billion euro last year, on the back of the Brexit-induced weakness in the pound.

The UK accounts for around 14pc of Ireland's exports, but the figure is much larger for specific sectors. About 40pc of Ireland's food and drink exports are sold into Britain, so any slowdown in terms of consumers' willingness to buy those products, or barriers due to tariffs, could prove a significant blow to producers here.

Ibec economist Fergal O'Brien said the EU needs to recognise that we are now in exceptional circumstances and that it has to allow governments to take the required measures.

Irish Independent

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