95pc of companies don’t have plan to deal with Brexit
THE number of Irish businesses that have a plan to deal with the fallout from Brexit is falling – prompting fears of rising complacency as growth continues and last year’s shock UK vote fades from memory.
The latest InterTradeIreland Business Monitor shows 95pc of businesses across the island of Ireland don’t have a plan for Brexit.
Small and medium enterprises are thought to be the least prepared, and are putting off taking action because of the difficulty of predicting the shape of a final settlement.
Incredibly, more than nine out of 10 firms that actively trade cross-Border have yet to make a Brexit plan.
There are fears that continued strong growth in the Republic, in particular, is masking the dangers posed by the UK vote to leave the European Union.
“A buoyant economy should not distract from the need to confront and prepare for challenges that lie ahead, especially in terms of dealing with rising costs, skills shortages and potential changes to trading relationships. Our latest business monitor shows that over 70pc of businesses are operating on very tight margins (below 10pc) and therefore carry a high exposure to rising costs,” Aidan Gough, strategy and policy director at InterTradeIreland, said.
The ‘Sunday Independent’ reported yesterday that the Government is seeking European Commission support for a scheme to provide as much as €10m each, in grants or equity, to businesses affected by Brexit.
To date, the biggest impact of Brexit has been increased currency volatility, mainly a significantly weakened the pound, eroding margins for Irish exporters into the UK. More than a fifth of companies, and four out of 10 exporters, say they have been impacted negatively so far. That could be set to increase on the back of a deepening political crisis in the UK parliament, where a sexual harassment scandal has already led to a mini cabinet reshuffle at a time when Brexit negotiations remain up in the air.
The currency has fallen for the past three weeks on concerns about Brexit, and as the Bank of England failed to signal the start of a tightening cycle after raising rates on Thursday.
While officials are due to resume Brexit discussions in Brussels on November 9, the British government may be distracted by the sexual harassment scandal at home. With British Prime Minister Theresa May’s judgment being questioned, and the government only having a slim majority in parliament, the issue is now on currency traders’ radar as a tail risk, according to both Nomura International and Mizuho Bank.
UK business leaders, meanwhile, are increasingly frustrated with the administration there.
Confederation of British Industry (CBI) president Paul Drechsler will appeal for a “single, clear strategy” in an address today to the CBI’s annual conference in London.
He won’t shy away from criticism of Mrs May, with a stringent rebuke for her “episodic approach” to negotiating Brexit, according to emailed excerpts of his planned remarks.
“I’m reminded of a primetime soap opera, with a different episode each week,” Mr Drechsler will say, before listing the premier’s Brexit interventions. “First Lancaster House, then Article 50, the European Council, two dinners with Juncker – and no doubt many exciting instalments to follow. Each one becomes the big story, until the next one rolls around.”
Britain faces a steady drumbeat of warnings from business about the need for certainty as the clock ticks down to March 2019, when it is due to leave the EU – with or without a deal.
Bank of England Governor Mark Carney said on Thursday that Brexit is the biggest factor determining the UK economic outlook.