Ibec, the group that represents Irish business, today welcomed the publication of the Government’s Brexit Omnibus Bill, particularly the new VAT measures to relieve major cash flow issues that will arise in the case of a Brexit ‘no deal’. While the group said it was vital that all sides worked to avoid a cliff edge ‘no deal’ at the end of March, a significant state aid framework needs to be in put in place over the coming weeks, which can be immediately triggered in worst case scenarios. The EU and Irish government must move swiftly to protect vulnerable businesses and jobs in the case of a major Brexit economic shock. Businesses need clarity in advance of March 30th on the details of support measures which will need to be provided with immediate effect if the UK leaves without a deal on that date.
Ibec Director of Policy and Public Affairs Fergal O’Brien said: “In a ‘no deal’ scenario, over 90,000 businesses in Ireland will immediately be required to pay VAT on all UK imports up front. The Government has listened to Ibec’s proposal for a VAT deferral scheme and the Bill will introduce a new system of postponed payment. Given other intense pressures on cashflow in the case of a hard Brexit, from falling margins and stretched payment timelines, it is vital that new VAT payment timelines do not add to the problem.”
On state aid, Mr O’Brien said: “A ‘no deal’ Brexit would present an unprecedented economic challenge that would demand immediate state aid intervention to save businesses and protect jobs. It is vital that Ireland gets advance clearance from European authorities to introduce a temporary state aid regime. To support businesses, €1.3 billion of funding should be made available over a three-year period to help vulnerable companies trade through any period of disruption, adapt and succeed into the future. Funds should be targeted at supporting innovation, market diversification, upskilling and capital expenditure in equipment and machinery.” Please see below more details of Ibec’s state aid proposals.
“Taking a ‘no deal’ cliff edge off the table is the priority, but business also needs more clarity on how a ‘no deal’ outcome would be managed on the ground, from day one. Even in worst case scenarios, we will need a phased transition to a new trading relationship and a compliance trajectory managed over time, which minimises disruption. Adjusting to a radically new trading relationship with the UK at the end of March is neither possible or realistic,” concluded Mr O’Brien.