IBEC claims Irish firms will need €400m a year in subsidies to help them through Brexit

As talks on Brexit formally begin in Brussels later today, it has been claimed Irish companies may need to be subsidised to the tune of €300-€400m per year in order to help them trade through the disruption, writes Stephen Rogers.

Ibec, which made the call, suggested the funding should come from the EU and the Government. It said the resources required will be in the region of 5% of the value of current indigenous annual export sales to the UK and that up to €400m may be needed annually in a worst case scenario.

It comes as Taoiseach Leo Varadkar announced he is to meet the British Prime Minister Theresa May in Downing Street today.

Mr Varadkar said: "I am looking forward to travelling to Downing Street today to meet the British Prime Minister, Theresa May. I want to renew the close bond and strong relations that exist between Ireland and the United Kingdom.

"Among other things, we will discuss Northern Ireland and the need to re-establish devolved Government, and Brexit, focusing on how we can avoid any adverse impact on the rights and freedoms of our citizens, on trade and the economy."

The employers’ body says the monies would be to help Irish companies innovate, diversify into new markets, train staff and invest for the future. It recognises that, given the size of our export/import relationship with Britain, under its proposal the supports Ireland would get from the EU would be greater than other member states.

But as Fergal O’Brien, Ibec’s director of policy, pointed out “the situation is not of our making and we should not be economically challenged as a result of it.”

Ibec will today launch, what it describes as, a comprehensive set of proposals to progress EU-UK negotiations and limit the negative impact of Brexit on business and the wider economy.

It says the approach to the negotiations should, amongst other things, target a smooth exit, comprehensive transitional arrangements, the closest possible future relationship, and the unique Irish challenges.

It believes the recent election in Britain has opened up possibilities, not least a greater chance that it will remain in the customs union.

Fergal O'Brien of IBEC.

“"Any deal must recognise the unique economic and political challenge for Ireland and include a range of specific measures to address these,” said Ibec chief executive Danny McCoy.

“An early focus on avoiding a hard border with Northern Ireland is vital, but the Irish approach must also be informed by the greater economic importance of the east-west Irish-British trading relationship. Across both trade and investments, the outcome of negotiations must not disadvantage Ireland.”

As well as the state aid measures, Ibec makes recommendations around trade; customs; the single market and regulation; and the common travel area and the all-island economy.

“It is in everyone's overwhelming economic interest for the UK to remain in the EU customs union, but if not, close cooperation and simplified custom procedures will be needed,” Ibec said. “An agreement on trade and customs on the island of Ireland should be framed in the first phase of talks. The UK and EU should also agree a common transit system early in the negotiations.”

Ibec pointed out that there are certain sectors of the economy here which are particularly exposed by Brexit. While roughly 14% of goods and 20% of services exports go to the UK, that proportion is much higher for specific sectors of the economy.

“These are sectors that are typically jobs-intensive and are located in rural parts of the country,” the employers’ body said.

It pointed out that, in the Agri-food sector, more than €4.3bn annually is spent on purchases from primary producers. A further €2.1bn is spent on compensation of employees in the sector who primarily live in rural locations.

“There are 230,000 people employed directly and indirectly in the agri-food supply chain and 40% of its exports (€4.4bn) go to the UK,” it said. “In the region of 46,000 jobs in the sector (2.3% of total employment in the economy) are linked directly or indirectly to exports to the UK.”

On the services side, it said those most exposed are transport services (€2.5bn representing 60% of total exports) and financial services (€2.25bn representing 30% of total exports).

“Tourism is also heavily reliant on the UK as 41% of visitors to Ireland come from Britain and the UK accounts for 32% of total travel services exports,” Ibec said.

It warned that Ireland’s exposure to the UK is even higher for imports, as 32% of goods imports come from there. “This is more than three times the share of the next highest country, and much higher than the EU average of only 4%.”

KEYWORDS: brexit, ibec


Most Read in Business

World Markets