Business Irish

Monday 18 February 2019

Investments on hold amid fear of crash-out Brexit

Braced for Brexit: Attorney General for Ireland Seamus Woulfe (left) with UK Attorney General Geoffrey Cox following talks in Dublin last week. Photo: Brian Lawless/PA Wire
Braced for Brexit: Attorney General for Ireland Seamus Woulfe (left) with UK Attorney General Geoffrey Cox following talks in Dublin last week. Photo: Brian Lawless/PA Wire

Donal O'Donovan and Ellie Donnelly

One-in-three small to medium-sized businesses in the Republic and four out of 10 firms in the North are holding back planned investments because of Brexit.

With growing fears of a hard Brexit, a swathe of businesses that had planned to expand has either postponed or cancelled outright such investment, according to the latest quarterly AIB Brexit Sentiment Index.

Call to scrutinise supply chain: Minister Heather Humphreys
Call to scrutinise supply chain: Minister Heather Humphreys

The figures demonstrate the real economic effect of the continued uncertainty about the future trading links between the UK and Ireland after the Brexit deadline on March 29.

Yesterday, the head of the UK's biggest business lobby group, the Confederation of British Industry (CBI), told Sky News the chances of Britain crashing out of the EU next month without a deal have increased and said the country was in "the emergency zone".

"It feels like the parliamentary process is in logjam, no way can be found through, so that prospect of no deal feels much higher," CBI director general Carolyn Fairbairn said.

"We really are in the emergency zone of Brexit now."

Here, almost seven in 10 SMEs now believe the UK's withdrawal from the European Union will have a negative impact on their business. That's up from 63pc in the third quarter of 2018.

In Northern Ireland, small firms are slightly more optimistic - 62pc believe Brexit will damage their business.

Just one in 10 SMEs in Northern Ireland expects a hard Border after Brexit, compared to 27pc in the Republic.

The head of business banking at AIB, Catherine Moroney, said most businesses on both sides of the Border wrongly assume they won't need extra finance to ride out the impact of Brexit.

"Brexit, whether hard or soft, will inevitably result in the need for increased working capital to manage businesses' cost pressures or possible price inflation should Brexit eventuality result in the UK leaving the EU customs union," she said.

The UK's withdrawal from the European Union is now 46 days away. Just over half of SMEs in the Republic have yet to engage in any form of Brexit planning, and in Northern Ireland the figure is even higher at 56pc.

Business Minister Heather Humphreys will today urge all Irish businesses - of every size - to scrutinise their supply chains to understand the risk of exposure when the UK leaves the EU. There has been a focus on Irish exports, but imports from the UK and via the UK play a major role in Irish manufacturing, she said.

The UK accounts for a quarter of total Irish goods imports and a large proportion goes on to be further processed in Irish manufacturing.

"Some businesses may not think that they will be exposed post-Brexit, but if they trade with the UK, including Northern Ireland, or their supply chain is partly dependant on the UK they will be," she said.

Irish Independent

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