Very few businesses in Ireland will be unaffected by Brexit which is probably the most serious threat to the future economic prospects of Irish businesses. Even if you don’t import or export your customers may now be looking at cheaper imports from the UK with a weaker sterling.
Initial optimism of major opportunities for Ireland in the wake of the Brexit vote have since been tempered by the swift move of the UK to reduce corporation tax rates, tie up trade deals with non-EU countries and avail of the export opportunities presented by a weaker currency.
At the time of writing, weeks after the Brexit vote many long-term consequences remain uncertain including:
- Whether Ireland can attain a special dispensation concerning having to implement a fixed land border.
- Whether a free movement between Ireland and the UK can be maintained irrespective of whether the UK wishes to restrict this between itself and all other EU countries.
- Whether Ireland can achieve any ‘special status’ in a trading relationship with the UK when the Brexit is complete.
- What will be the eventual exchange rate range between sterling and the Euro?
If your business exports then you might be advised to intensify your efforts to win a share of the many opportunities that will exist for the next few years whilst still exploring other markets. As of July 2016 the UK’s National Infrastructure Delivery Plan envisages huge spending on more than 600 projects in all sectors across the UK, up to 2021 and beyond. This plan and others include investments of £483bn in 10 waste projects, £256bn in 167 energy projects, £134bn in 329 transport projects, €6bn for communications and £5bn for science and research plus many billions to be spent on flood and water infrastructure.
Opportunities in these and many more sectors exist for Irish businesses who have the expertise and ability to tender for and win significant contracts in the UK.
Irrespective of the outcome of the eventual Brexit negotiations the consequences are that Irish businesses will inevitably face a more difficult operating environment and will need the following:
- A Business Plan adapted for the new scenario with plans to deal with each outcome of the negotiations. This will entail both short-term and long-term plans.
- A structure which will ensure their plans are achieved and delivered.
- For exporters a very careful scrutiny of their costs and margins at each exchange rate and determination of the point at which exchange rate the UK market becomes uneconomic.
- An intensification of efforts to find other export markets for their goods.
- Ensuring their plans are formulated to avail of all Enterprise Ireland supports for exporters.
- For businesses just serving the Irish market they will need a strategy to ensure they can compete effectively with cheaper UK imports?
If you need advice on any aspect of this feel free to give me a call.