Friday 20 October 2017

Warning four counties will be hit hardest by Brexit exposure

The agri-food sector is particularly exposed to the dangers of
Brexit
The agri-food sector is particularly exposed to the dangers of Brexit

Colm Kelpie Brexit correspondent

Cavan, Monaghan, Kerry and Longford are the counties most exposed to the economic effects of a hard Brexit, while average farm incomes overall could be slashed by more than 6pc, a stark analysis shows.

More than one in five workers in each of those counties work in the sectors most vulnerable to the UK's EU exit, the study states, including agri-food and beverages, accommodation and tourism services, air and freight transport and traditional manufacturing.

Some 243,000 workers are employed in those sectors, according to the study by business body Ibec.

"By examining employment in these sectors across different counties, we can give some idea as to which areas of the country are most exposed in the event of a 'hard' Brexit," the Ibec report stated. The counties with the highest exposure are Cavan, which has 28pc of its workforce in the affected sectors, Monaghan at 27pc, Kerry at 22pc, and Longford at 21pc.

"Exposure is lowest, as expected, in urban areas," the report stated. "The least exposed counties include Cork and Galway cities along with the four Dublin local authorities and their surrounding counties (Louth, Meath, Kildare and Wicklow)."

The analysis said that in nominal terms, Co Cork has the highest numbers of jobs in the exposed sectors at 28,000. But that is less than 14.5pc of employment in the region.

Ibec also warned of steep hit to farm incomes and output, arguing that a hard Brexit has the potential to reduce farm output by around €3,000 per year per farm, across 140,000 farms throughout the country.

This would result in a net 6.5pc fall in average farm incomes overall and an up to 9.5pc fall in incomes for livestock farms, Ibec claimed.

Referring to a recent study by cross-border development body InterTradeIreland and the ESRI detailing the impact on food and beverage manufacturing exports to the UK in the event of a hard Brexit, Ibec said overall food and beverage manufacturing output could be slashed by around 8pc permanently.

"Our own modelling extending from these findings, suggests a €2.1bn fall in Irish food and beverage manufacturing exports would translate to a fall of over €415 million in demand for farm output," the Ibec analysis stated.

"Applying this to figures from Teagasc's National Farm Survey suggest that the immediate impact on Irish exports to the UK alone would translate to a steep reduction in farm output of around €3,000 per farm annually, across 140,000 farms. Assuming a proportional fall in variable costs, this would result in a net 6.5pc fall in average farm incomes overall and up to a 9.5pc fall in incomes for livestock farms."

The study also stated that any hit to tourism from the UK, such as from the weakening in sterling, will be more keenly felt in rural areas.

It stated that British tourists are most important for the north-west, with British visitors accounting for just over 47pc of the total tourist revenue in the region, followed by the east and midlands at 36pc, and the south-east at 35.1pc.

Gerard Brady, Ibec's head of tax and fiscal policy, said Budget 2018 must include measures to protect these vulnerable sectors.

"There are serious downside risks on the horizon," he said.

"Following a fall last year, indigenous exports to the UK have recovered some lost ground in the first half of 2017.

"But there will be increased volatility as the year goes on, with sterling depreciating once more since the UK election. No matter what the outcome, Brexit will hurt both our indigenous exporters and rural regions disproportionately."

Despite the bleak assessment, growth prospects remain robust. Ibec forecasts GDP growth of 4.2pc this year and 3.2pc in 2018, driven by a strong domestic economy.

Consumer spending is to rise by 2.8pc. Investment is forecast to grow by 8.4pc as the construction sector continues to recover from a low base, it said.

There are serious downside risks on the horizon

Indo Business

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