Tuesday 18 June 2019

Five sectors in the line of fire after UK bows out

Mushroom suppliers are at risk to disruption in the UK market. Stock image
Mushroom suppliers are at risk to disruption in the UK market. Stock image
Gavin McLoughlin

Gavin McLoughlin

1. Agri-food

Tariffs on Irish food sold in the UK would add up to about €1.7bn a year, pricing much of it out of the market. Transport disruption would also hit businesses with short shelf-life products and tight margins.

Mushrooms growers were in the front lines of Brexit. Some were wiped out just by the decline in sterling after the 2016 Brexit vote. Paul Wilson of industry giant Monaghan Mushrooms said selling to France might be developed as an alternative but it's a stretch.

Meanwhile, the vast Irish dairy sector is set up to a significant extent just to feed the UK's vast appetite for cheddar cheese. If that market is cut off massive investmment will be needed to shift production.

2. Transport

There is a deal in place to allow sealed Irish containers cross the UK landbridge even if there's a hard border. But delays at the Channel ports would mean hauliers face extra costs as drivers are forced to wait. Some perishable food will go off, drivers may quickly exceed their permitted hours on the road without getting very far.

Airline operators have confirmation that existing air services between the UK and the EU27 can continue regardless of what happens on March 29th. Beyond that it's less clear. For investors, a hard Brexit will limit the right to invest cross border - making it harder for a British investor to own shares in an EU airline and vice versa. In a sector undergoing a wave of consolidation, its an undesirable complication.

3. Construction

Ireland's construction materials industry does huge business with the UK - it may be the most exposed of any sector here to a British recession. A survey published yesterday by the Construction Industry Federation also found a third of respondents derived at least 20pc of their revenue from there. Almost half said Brexit would have an immediate negative impact on their business.

4. Chemicals/pharmaceuticals

Brexit disruption could lead to medicines shortages ­- some two-thirds of our medicines come through the UK. Government has played down the risks, saying they're confident there won't be any "initial" problems.

5. Financial services

Much of the coverage of Brexit has focused on the opportunities to attract banks and insurers.

But Bank of Ireland does a substantial amount of business in the UK, which accounts for 30pc of its revenue, and AIB has a business in Northern Ireland. Damage to the UK and Irish economies will hit Irish banks still vulnerable after the crash.

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