Weak pound is putting small Ir­ish firms in jeop­ardy

Belfast Telegraph - Business Telegraph - - Analysis & Company Report - BY SA­MAN­THA MCCAUGHREN

THE weak­ness in ster­ling has the po­ten­tial to “wipe out” a num­ber of small and medium-sized en­ter­prises (SMES) in the Repub­lic, the Bri­tish Ir­ish Cham­ber of Com­merce has warned.

John Mcgrane, di­rec­tor gen­eral of the cham­ber, said many busi­nesses were al­ready in ‘se­vere pain’ due to the cur­rency changes.

“We are al­ready hav­ing dis­cus­sions with lots of them which are re­ally strug­gling at 93p (one euro) and are very wor­ried about the fu­ture,” he said.

The cham­ber is about to pub­lish its pol­icy pa­per on sup­port­ing SMES through Brexit and urged the Ir­ish Gov­ern­ment to act now. “It is the top is­sue for SMES. Brexit ex­is­ten­tially threat­ens lots of SMES. But it is al­ready hap­pen­ing for many com­pa­nies,” he added.

Among the rec­om­men­da­tions is the devel­op­ment of a mar­ket­ing grant for Ir­ish SMES which are ex­posed to the UK.

“That showed we know how to do this, the is­sue now is to widen it as far as pos­si­ble to the great­est num­ber of af­fected peo­ple,” said Mr Mcgrane. “While food is very ex­posed, it is far from the only sec­tor that is dam­aged.”

Another sec­tor al­ready be­ing hit is the call cen­tre busi­ness. “Lots of Bri­tish busi­nesses are ser­viced by call cen­tres in Ire­land,” he said. “If you take some of the cat­a­logue fash­ion com­pa­nies, for ex­am­ple, a lot of those have their cus­tomer care cen­tres in Ire­land.

“That means Ir­ish busi­nesses in Ir­ish towns are be­ing paid in ster­ling. Their cost base is in Ire­land and the value of their sales is down 20% since the ref­er­en­dum. And they have no pos­si­ble way of re­duc­ing their cost base by 20%.

“A num­ber of those com­pa­nies are al­ready in se­vere pain.”

The pol­icy pa­per high­lights how un­cer­tainty is stalling ex­pan­sion plans and cites an ex­am­ple of an Ir­ish firm which wanted to ex­pand op­er­a­tions into the UK mar­ket: “They had looked at premises and joined the Bri­tish Ir­ish Cham­ber of Com­merce but are now hold­ing off on in­vest­ing in the UK mar­ket un­til fur­ther clar­ity over Brexit emerged.”

The pa­per’s rec­om­men­da­tions in­clude the in­tro­duc­tion of a cus­toms voucher scheme for all SMES deal­ing with cus­toms for the first time. It backs a re­duc­tion in VAT, an ex­pan­sion of the en­trepreneur re­lief in keep­ing with the UK’S more gen­er­ous scheme, and for the Ir­ish Gov­ern­ment to in­crease cap­i­tal ex­pen­di­ture to 4% of GDP.

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