Tuesday 12 December 2017

Mark Fielding: Apocalypse scenario isn't on cards for us

To stay in the Euro club or to go: that is the big question
To stay in the Euro club or to go: that is the big question

Mark Fielding

Brexit is the biggest and most important decision in a generation for the British.

Perhaps the most depressing thing is that this referendum, and Britain's future, is at risk of being decided through ignorance. Ignorance led by misinformation that fails to grasp that this is 2016, not 1816.

The reality is that the real bread and butter facts are being drowned out and the UK population is being fed a diet of half-truths and downright lies, based on jingoism when the real issues are not just complex but fundamental to their geopolitical and economic future.

The idea of a Brexit is somewhere between stark-raving lunacy and economic suicide.

Just look at who is on the 'Leave' side. Nigel Farage, Mark Reckless and Boris Johnson; cheered on by Marine Le Pen, Vladimir Putin and The Donald. Recently, Michael Gove, viewed as the brains of the outfit, scored a howler of an own goal by holding up Bosnia, Albania and Ukraine as models for post-Brexit Britain. Changes to British electric toasters and kettles have replaced the straight cucumber!

You would think that it should be easy to counteract their little Englander arguments but neither logic nor evidence will appeal to high-temperature emotions. The draft outline deal agreed by Cameron has not, it appears, won over a majority of UK voters, with new polls showing an increase in Brexit support.

Brexit is not so apocalyptic from an Irish perspective. At present, the arguments on both sides have a tendency towards the catastrophic. The Economic and Social Research Institute in its November 2015 Brexit paper says that it is easier to focus on a worst-case scenario; a Brexit. It follows on in the paper saying that in a Brexit, the UK will obviously be less attractive to Foreign Direct Investment (FDI) and that this would negatively affect growth here, as less of our exports would be needed! The words 'crumbs' and 'big man's table' come to mind.

What about us going for that FDI? The Organisation for Economic Co-operation and Development (OECD) says that Ireland could benefit to the tune of "$6.5bn of additional FDI, raising stock of FDI in Ireland by 2pc". We have the ability and the capacity to achieve that; if Carlsberg was an FDI hunter it would probably be the IDA. Look at the positive impact on the direct creation of jobs and also the indirect creation of spin-off industries. I genuinely believe that if the UK leaves Europe, we will gain big time in the FDI stakes.

Brexit does not mean that the UK will be closed for business overnight. The doomsday predictions from the ESRI, the employers' body, IBEC, Official Ireland et al show Gross Domestic Product (GDP) reductions of various sizes, as if we Irish were going to sit on our hands and allow this to creep up on us. This ability to "react" is ignored and is a major weakness in the analysis.

So, having said that Brexit will not be apocalyptic, it is still good business sense to plan around it and spread the risk and exposure. If Brexit is approved, it will be years before any agreements are finalised. There will be time to take action to overcome any negative consequences to our supply chain.

Is your business prepared for Brexit?

Action beats meditation. Look at your situation vis-a-vis the UK. It makes sense obviously not to have all your eggs in one basket. Whether you are exporting to or importing from the UK, remember, Brexit or Bremain, there will be a period of uncertainty which will affect sterling and the euro.

Are you hedging your currency exposure? Are you actively looking for new markets? Are you seeking new suppliers outside of the UK? Are you using your purchasing muscle to improve trade price? Are you forming new business ties in the UK and the North to help then access the EU, in the event of a Brexit?

Make sure you are using all available help from Enterprise Ireland, Local Enterprise Offices and InterTrade Ireland.

To quote Winston Churchill: "A pessimist sees the difficulty in every opportunity; an optimist sees the opportunity in every difficulty."

If our neighbours leave, let's stop pussyfooting around, this is 'senior hurling'. Official Ireland needs to refocus. There are opportunities under Brexit, let's grab them.

Mark Fielding is chief executive of the Irish Small and Medium Enterprises Association

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