Government must focus on retaining free movement of people between Ireland and the UK; lowering the cost of doing business in Ireland; and making the Irish tax system more competitive versus the UK.
Speaking today at the Oireachtas Symposium on 'The Economic Implications of UK Withdrawal from the European Union', Patricia Callan, SFA Director, stated: "The UK is a key marketplace for our small exporting companies. It is a learning ground when they’re starting up, and it is not easy to diversify into other markets farther afield without significant resources. Equally, the UK is our biggest market for tourism visitors, which has an impact on local economies right around the country. The threat of recession in the UK is very real and we would be very concerned about the knock-on implications of that for our entire domestic economy."
A survey of members identified the three most negative impacts of Brexit on small firms as:
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Exchange rate movements (48%)
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Cost of exporting to Northern Ireland/Great Britain (39%)
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Pricing (38%)
A much smaller number of companies indicated that exchange rate movements and pricing issues arising from the Brexit vote would have positive impacts on their business (10% and 7% respectively).
Amongst small companies, only 8% had a contingency plan in place before the vote. A further 17% said that they were putting in place a contingency plan immediately. 17% also plan to work on a contingency plan in the coming months, while over half of the respondents (58%) said that they don’t have a plan or it is too early to tell.
"Whilst much of the discussion to date has focussed on the exchange rate volatility and investment confidence, it is important that we now move our focus firmly to working on issues in our locus of control. Our members have identified priority issues for the Government to tackle in the immediate future, namely: Free movement of people between Ireland and the UK; Renewed focus on the cost of doing business; and tax competitiveness versus UK," continued Callan.
"Cost-competitiveness is a huge issue for our members this year. Rising external costs, for which they are price-takers and have no control, are posing serious challenges. Government policy has a significant impact on many of these costs, such as labour costs, interest rates and insurance costs. The SFA is calling on members of the Oireachtas to tackle these costs and support small businesses as they navigate the challenges of Brexit," Callan concluded.
The SFA Brexit Survey was conducted in July 2016. 780 responses were received from a sample group of 2,500 SFA member companies.
Article Published: 22/09/2016