Weak pound is putting small Irish firms in jeopardy
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.