1,900 client firms are highly exposed to Covid-19 disruption, nearly 650 to reliance on exports to UK
Hundreds of Enterprise Ireland-sponsored firms face a double whammy from Covid-19 disruption losses and exposure to a ‘hard’ Brexit, the agency reported today.
It says about 300 of its supported firms “are very exposed to Covid-19 and also have high levels of exports to the UK”.
Enterprise Ireland CEO Julie Sinnamon said many of the agency’s client companies posted strong 2019 export figures and “began this year in a resilient position”.
“The second half of 2020, however, is expected to be one of the most challenging facing Irish businesses in recent history,” she said.
EI said about 1,900 of its 5,000 client firms are “directly affected” by Covid-19 disruption, while nearly 650 do high volumes of trade with the UK that will face higher costs and red tape from January 1. Almost half of these also are being hit in various ways by Covid-19 losses.
“Not only have many businesses been impacted by a significant reduction in customer demand from markets across the world due to Covid-19, but they are also facing the largest structural change to trading with the UK in over 50 years,” Ms Sinnamon said.
She said Brexit would mean that “Irish exporters to the UK are going to be faced with new changes to customs procedures, regulatory alignment and, undoubtedly, additional costs”.
EI would “help Irish exporters to adapt their business models, move to online selling and recover sales as international markets reopen”, she said.
Enterprise Ireland said exports by its client firms rose by 8pc last year to €25.6bn, with stronger growth into Europe and North America than to Ireland’s usual top trading partner, the UK.
It said exports to fellow eurozone nations grew 15pc to €5.6bn, while exports to North America rose 16pc to €4.7bn.
Growth was particularly strong to the Netherlands, up 35pc to €1.4bn, driven by an 89pc surge in turnover for Irish construction firms there. Exports to Germany grew by 16pc to €1.3bn, including a 42pc gain in trade for Irish electronics firms.
This helped lower export dependence on the UK market to 31pc of EI clients' total exports, down from 42pc a decade ago.
Nonetheless, the UK remained EI’s top export market, rising 2pc to €7.9bn, mostly for non-food goods.
The agency said its client firms reported a 12pc drop in new export contracts in the first half of this year, particularly since the virus crisis reached Europe and North America in March.
“Before the onset of the Covid-19 pandemic, Enterprise Ireland-backed companies had already faced challenging circumstances due to the uncertainty caused by Brexit. Despite this, Irish exporters had a really strong year in 2019, with record levels of growth,” said Tánaiste Leo Varadkar, the minister for enterprise, trade and employment.
“We know we need to do more as our economy continues to reopen. The July Jobs Stimulus will be far reaching and of scale to get our people back to work and get us back on the road to growth and prosperity,” he said.
EI-backed food producers saw exports rise last year by 3pc to €12.17bn. Construction firms increased overseas activity by 19pc to €2.24bn.
The agency said its client firms employed 221,895 people, 35pc of them in Dublin, and spent €29.3bn in the domestic economy.
EI last year opened eight new offices in Munich, Lyon, Manchester, Copenhagen, Montreal, Seattle, Melbourne and Ho Chi Minh City.