Irish SMEs need to prepare for Brexit, warns cross-border business body
With Brexit negotiations at a standstill and the prospect of a no-deal growing, InterTradeIreland has urged Irish businesses to prepare for a no-deal scenario.
With the October 31 deadline looming, firms on both sides of the border are facing the prospect of disruption to supply chains, potential customs tariffs and administrative obstacles to cross-border trade. InterTradeIreland supports island-wide collaboration and helps businesses in developing cross-border markets. Its latest research shows most SMEs across the island are not sufficiently prepared for a hard Brexit.
“When we look at cross-border traders, the number of businesses planning for Brexit hasn’t really shifted over the last few quarters,” says Kerry Curran, policy research manager at InterTradeIreland.
“So 18pc of businesses trading across the border - those most exposed to Brexit - are planning for Brexit. But when we asked a whole series of questions around whether they were looking at customs tariffs, supply chains, cashflow impacts, current contracts and non-tariff barriers like quotas, permits or rules of origin certification, the numbers of businesses who’d actually looked at the potential full impact of Brexit was very low.
“14pc of cross-border traders are considering customs, 12pc examining potential tariffs and 7pc considering impact on supply chains, which should be a fundamental piece of any plan.”
Research by InterTradeIreland shows that 40pc of companies on both sides of the border report they are currently in growth - but growth expectation for the future is at worrying low levels.
“When we ask businesses if they expect to continue to grow over the next 12 months, only 26pc of firms tell us that they do. These low levels of growth expectation are comparable with 2009 when we were in a recession.”
Preparing for Brexit
InterTradeIreland’s Bitesize Brexit campaign is offering a range of free services to cross-border traders to help them prepare for the potential consequences of Brexit and reduce the impact on their business.
Businesses can benefit from free webinars and online resources containing easy-to-understand advice, as well as drop-in information events. Firms across the island can also avail of InterTradeIreland Brexit funding of up to €5,000 towards professional advice. This includes access to one-to-one advice on the issues facing their business, risk calculation and possible mitigations that can be made.
“Really what we’re trying to do is make sure businesses understand what being prepared looks like and give them the small steps to get them there between now and the end of October,” explains Kerry.
Uncertainty surrounds Brexit at the moment, leaving SMEs in the unenviable position of not knowing exactly what they should be preparing for. Kerry advises business owners to prepare for the worst-case scenario by working out what they need to do in the event of a hard Brexit, pointing out that it can be a valuable exercise even if a no-deal doesn’t materialise.
“It’s a useful process for businesses to go through every few years, to have a look at how your company might withstand a shock. Really that’s what we’re doing with Brexit planning.
“Look at what you might do, look at how you might mitigate it, and even if there isn’t that market shock, you have a better understanding of your business model and how to improve it.”
The impact of Brexit on Irish businesses
Businesses that currently trade across the border are obviously the most at risk, with smaller firms being the most exposed.
“A hard Brexit would have the impact of thoroughly changing the market environment,” explains Kerry. “Changing how businesses trade across the border from the way they do it at the moment, in a comfortable way within their local, functional economy, to potentially putting significant barriers to trade in that local economy. Smaller firms with less capacity and less cash reserves will struggle to adjust in the short to medium-term.”
A no-deal scenario could have serious implications for businesses that have always operated within a customs union, creating a whole new set of business challenges.
“Having the access to what is essentially your local economy disrupted through barriers, whether that is tariff barriers or through additional costs that you pay, or non-tariff barriers which include the additional administrative work associated with trading into another jurisdiction - those are the real issues businesses will have.
“Take the opportunity now to be better prepared for Brexit, no matter what Brexit looks like,” adds Kerry.
“At the very earliest, it’s not happening until October 31. Take these weeks and months in advance of that to take little steps, week-by-week and month-by-month, to be better prepared. You’re not going to regret investing that time to prepare for what will be one of the biggest market changes that your business may face.”
If there is one thing you do today, address the elephant in the room. Go online today and discover the small steps you can start to take to prepare for Brexit. You can even get vouchers to pay for expert consultancy for your business. Check out the InterTradeIreland website.