The food and drink industry could face “unbearable” additional costs of 1.5 billion euros if a deal is not reached between the EU and the UK, an Oireachtas committee has been told.
Businesses could be plunged into chaos in January over the lack of clarity around how trade will operate on a day-to-day basis, it was also claimed.
Negotiations between London and Brussels are ongoing this week, with both sides stressing that time is running out to strike an agreement before the end of the Brexit transition period on December 31.
While businesses have been urged to be ready whether a deal is struck or not, only 42% of firms believe they are ready for the deadline, according to an Enterprise Ireland survey.
The Oireachtas Joint Committee on Enterprise, Trade and Employment heard on Wednesday that Brexit poses a huge risk to Irish businesses’ competitiveness.
Fergal O’Brien, director of policy and public affairs at employers’ group Ibec, said: “A no deal for businesses would mean that all of the other issues that still need to be worked out between the UK and the EU become a lot more difficult without the platform of the bare bones trade agreement.
“If we are facing tariffs, in our food and drink industry alone we are dealing within the region of 1.5 billion additional costs and tariff costs on Irish businesses.
“That is going to be an unbearable cost.
“Given that it’s less than four weeks out, how are companies expected to price their products operationally and from a commercial perspective into a UK market when we don’t know whether there will be tariffs?”
The Joint Committee on Enterprise, Trade and Employment meets to discuss the readiness of businesses, employees and communities for #Brexit with @ibec_irl @irishcongress & representatives from Border Communities against Brexithttps://t.co/OM4LMB9ODv https://t.co/xqM5CZ5cJs— Houses of the Oireachtas - Tithe an Oireachtais (@OireachtasNews) December 2, 2020
He added: “The big challenge for the Irish economy from Brexit is risk to our competitiveness.
“When you look at the benefits that the UK and all of us being in the single market and the customs union had over a period of decades, those benefits have been very substantial for businesses and consumers.
“The untangling over that is now going to happen almost overnight and it’s going to bring a lot of extra costs to doing business.”
Tom Murray, a member of campaign group Border Communities Against Brexit, said the both sides of the border are “potentially” facing chaos on January 1.
“We don’t know if imports will come in freely, we don’t know if we will be able to export freely, we don’t know what level of paper work and VAT schemes and other levies that may be applied,” he said.
“We may be facing chaos over lack of instruction and clarity.”
Mr Murray told the committee that there is a “serious insufficiency” in information or detail about the implications of Brexit.
“This obviously comes from the lack of clarity at EU and British Government level as to what form of deal may take place, if a deal is completed successfully, or what no deal means in reality at a day-to-day level within business,” he added.
“Furthermore there is serious evidence of a lack of common understanding of the North of Ireland Protocol as already agreed.
“British Government action in respect to breach of the international agreement has led to a level of further disengagement and mistrust.”
Patricia King, general secretary of Irish Congress of Trade Unions (Ictu), said she is concerned about the complacency of some businesses that have not prepared for Brexit.
She told the committee: “Last Friday’s Enterprise Ireland survey revealed that only 42% of businesses believe they’re ready.
“It is clear that, while the pandemic is having the greatest impact on employment, Brexit has major consequences for many workers.
She added that recent Department of Finance estimates warned that a no deal outcome would increase unemployment, causing up to 10,000 job losses.
This impact would be concentrated in sectors such as agri-food, traditional manufacturing and financial services – all of which have been “relatively less affected by Covid-19” but which have “strong regional footprints”, Ms King said.
Fine Gael TD David Stanton said: “I have been alarmed by this for a long time and I think it’s been obscured by the fog of Covid. This is horrific.
“A deal would be terrible, a no deal would be absolutely unbearable.”