Half of SMEs have no plan for fallout from Brexit
Half of Ireland’s small and medium-sized businesses are not actively planning for the consequences of Brexit, research has revealed.
Figures from the Department of Business show many companies are still not taking steps to mitigate the effect of the UK’s departure from the EU.
Despite hardline Brexiteer Boris Johnson’s rise to power, business owners appear not to have engaged with the risks, which include possible new customs charges and plummeting sterling rates.
Mr Johnson has repeatedly said he will take the UK out of the EU on October 31 with no deal if necessary.
The situation was described as “extremely worrying” by Fianna Fáil’s Brexit spokesperson Lisa Chambers.
She said SMEs need to realise “we are just weeks away from a potentially catastrophic no-deal Brexit”.
“Report after report has stressed the impact that a hard or no-deal Brexit will have on Ireland and it is concerning that despite all of the warnings 50pc of SMEs have not taken steps to prepare,” Ms Chambers said.
She also claimed the Government has failed to adequately communicate with businesses.
The figures were released by Business Minister Heather Humphreys on foot of research by her department.
It shows almost 50pc of SMEs are “taking some form of active engagement”, up from 42pc in 2018 when a soft Brexit seemed far more likely.
Ms Chambers has called on the Government to initiate a “step change” in how businesses are dealt with.
But Government sources rejected the criticism, saying they had put in place a wide range of supports to help businesses prepare for Brexit.
“There have been numerous engagements and outreach sessions at national, regional and local level but businesses have to decide themselves if they want or need to take up the supports,” the source said.
“Deputy Chambers has called for a step change in the Government’s engagement with SMEs but has not outlined one thing that she would do differently.”
In a parliamentary reply to Ms Chambers, Ms Humphreys said her office was working “to raise awareness of key Brexit challenges, which include supply chain, tariffs, customs, regulatory standards, working capital and movement of labour, goods and services”.
She noted there is “little clarity” over the type of Brexit that will take place in October but State agencies are working to provide “extensive supports”.
However, only half of exporters are recorded as having a Brexit plan. The figure rises to 85pc among clients of Enterprise Ireland.
The Government has already predicted a massive economic shock if the UK leaves the EU without a transition period.
Between 50,000 and 55,000 jobs could be lost in Ireland within two years and another 30,000 would be at risk in the medium term.
There would also be a €6bn swing in our economic fortunes as growth slows.
Finance Minister Paschal Donohoe has begun the process of preparing two budgets, one which is based on a deal being agreed and the other on a worst-case scenario.
The UK’s departure could result in Irish economic growth slowing to just 1pc compared with current projections of 3.3pc for next year.
The agrifood sector will be highly exposed to World Trade Organisation tariffs that could be imposed on food exports to the UK.
Ms Chambers said there needs to be “a concerted effort to reach SMEs who are not actively preparing for Brexit and support given to those who are struggling to put mitigation plans in place”.
“While no one wants to see a no-deal Brexit, it is increasingly looking the most likely outcome,” the Mayo TD said.
“The next few weeks are crucial, and I sincerely hope there will be a marked change in the Government’s efforts to increase the number of SMEs with a Brexit plan in place.”
Meanwhile ING, one of Europe’s largest banks, said yesterday that its central assumption was that Brexit would be delayed, with a 40pc chance of a general election being held in the United Kingdom.
“It is very risky to go to the voters if there is a no-deal Brexit,” said economist James Smith. “A general election looks increasingly likely.”
The bank added sterling could fall to 95p per euro this quarter and the British economy would feel the pressure.
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