Ibec - for Irish business
Card 2 of 7

Priority 1: Mitigation and diversification package for impacted industries

24 March 2017
There are a number of ways in which the market for Irish exporters has changed since the last sustained period of similar Sterling exchange rates in 2010. For instance, margins in Irish industry are much tighter than in 2010. In addition the potential to reduce costs in the industry is much more constrained with most companies having gone through significant restructuring during the last decade.
In addition to the constraints on both retailers and manufacturers ability to internally adjust in the face of a weak Sterling their ability to pass through price in Ireland or the UK is now significantly weaker than in 2010 given both the income effects in the UK and the fact that trade growth in recent years has been built on lower unit prices.

Given the difficulty for most businesses to achieve prices increases in the UK, it is imperative that efforts are made to support companies to mitigate losses and retain UK market share and to diversify.
Enterprise stabilisation fund - Ibec believes Ireland's extreme exposure to both Sterling depreciation and the threat of hard Brexit warrants the re-introduction of the Enterprise Stablisiation measures which were last applied in 2009-11 or a similar scheme. The government must begin work at a European level to adopt a temporary framework for state aid in recognition of Irish industry special case with regards Brexit.
State Aid rules: As in 2009 a temporary framework for State Aid will be needed at a European level in order to offset the worst impacts of Brexit on otherwise viable firms. The government must begin now to work with European partners in order to achieve this.
Additional funding for market diversification and innovation measures - In the past, the UK has been the first port of call for Irish companies. This market will now be much more difficult to enter for new exporters. A market diversification and product innovation strategy with particular focus on maintaining U.K. Market share, increasing exports to other EU and international markets and investing more in product development will need to be introduced.
An access to finance package that includes sustainable financing via funding from the Irish Strategic Investment Fund (ISIF) - Irish firms pay a greater premium on funding compared to their EU counterparts. That premium is already two percentage points on funds borrowed. The work of ISIF and other funders in providing access to appropriate finance measures will have to be accelerated.
Trade finance measures - Ireland is one of only two countries in the EU without a state backed support for export credit. This can often be an important way of mitigating the risk for firms who are looking to diversify into new and riskier markets. This along with a broader suite of trade finance measures must be at the center of Ireland s diversification strategy.
Online trading supports - Growth in online trade to the UK is inevitable due to the weaker Sterling. This can only be mitigated by dramatically growing the share of Irish based business in the online spend of Irish customers. The online trading voucher should be expanded to a greater cohort of Irish retail SMEs (up to 50 employees) which are not currently online.