Brexit fears rise as 40pc of firms only ex­port to UK

Irish Independent - Business Week - - FRONT PAGE - Gavin McLough­lin

AROUND 40pc of Ir­ish goods ex­porters traded ex­clu­sively with the UK in 2016.

That’s ac­cord­ing to a ma­jor new sur­vey of the Bri­tish-Ir­ish trad­ing re­la­tion­ship by the CSO.

The fig­ures lay bare the po­ten­tial for a hard Brexit to wreak havoc on Ir­ish busi­ness, with SMEs set to be hit hard.

SMEs made up the large ma­jor­ity of the num­ber of en­ter­prises ex­port­ing goods to the UK, at 93pc of the to­tal num­ber of UK ex­porters. Mi­cro en­ter­prises (busi­nesses with fewer than 10 em­ploy­ees) alone made up over half the num­ber of firms ex­port­ing to the UK.

The agri-food sec­tor stands to be the most af­fected in value terms, with €3.4bn of goods ex­ported to the UK in 2016 – 24pc of the to­tal.

Rep­re­sen­ta­tive group the Ir­ish Ex­porters As­so­ci­a­tion (IEA) said more and more of its mem­bers have been look­ing to di­ver­sify their mar­kets since 2016 – a way of re­duc­ing ex­po­sure to the UK.

Re­cent fig­ures for visas sought by ex­porters show in­creases in the num­ber of trips to China, Rus­sia and In­dia.

But the IEA warned that in many cases Ir­ish SMEs “do not have the fi­nan­cial se­cu­rity to in­vest into R&D needed for diver­si­fy­ing into new mar­kets or hedge ster­ling to coun­ter­act the im­pact of the ex­change rate fluc­tu­a­tion”.

If Bri­tain leaves without a deal main­tain­ing the cur­rent trad­ing re­la­tion­ship with the EU, World Trade Or­gan­i­sa­tion (WTO) tar­iffs will ap­ply to goods ex­ported be­tween Ire­land and the UK.

Re­search car­ried out last year by the ESRI on be­half of cross-bor­der trade body In­ter­trade Ire­land said Ir­ish dairy goods go­ing to the UK un­der WTO rules would face tar­iffs of 46.6pc. Meat and fish would face a tar­iff of al­most 60pc.

Conor Mul­vi­hill, direc­tor of rep­re­sen­ta­tive group Dairy In­dus­try Ire­land (part of em­ploy­ers’ group Ibec), said the CSO fig­ures showed how a “loom­ing no deal Brexit is a clear and present danger to our com­pa­nies and their sup­pli­ers”.

“From a dairy per­spec­tive – our ched­dar trade is par­tic­u­lar is ex­posed in al­most ev­ery type of Brexit, and many of our mem­bers have ini­ti­ated in­vest­ment plans to re­flect that ex­po­sure and mit­i­gate the risk pre­sented to com­pa­nies and farmer sup­pli­ers.”

In 2016 alone Ir­ish com­pa­nies ex­ported ched­dar with a value of al­most €260m into the UK, Mr Mul­vi­hill said.

En­ter­prise Ire­land, the State body which helps Ir­ish firms ex­port, said a re­cent sur­vey of its clients showed 85pc have taken ac­tion for Brexit, up from 38pc a year ago.

It said the UK’s share of client ex­ports has been trend­ing down­wards since 2007 – with ex­ports to the rest of the world out­pac­ing the UK.

How­ever, the UK still ac­counted for 34pc of En­ter­prise Ire­land ex­ports in 2017.

It has in­tro­duced a fund to help busi­nesses re­search mar­ket-en­try strate­gies.

Ger­ard Brady, head of tax and fis­cal pol­icy at Ibec, said the data was also note­wor­thy for the scale of im­ports to Ire­land from the UK.

“Over €12bn of goods was im­ported by our whole­salers and re­tail­ers alone in 2016, with most of that be­ing un­der­taken by SMEs. If busi­nesses can­not di­ver­sify their sourc­ing Ir­ish con­sumers will re­main very vul­ner­a­ble to a Brexit shock,” Mr Brady said.

“It is cru­cial we have strong mea­sures in next week’s Bud­get to help Ir­ish busi­ness pre­pare for Brexit.”

New of­fi­cial fig­ures heighten wor­ries over goods trade, with SMEs and agri-food sec­tor set to be worst af­fected

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