Ibec calls for €1.5 billion over three years in ‘no deal’ State Aid

In advance of Tuesday’s Budget, Ibec today published a new report setting out the comprehensive set of supports required to stabilise the economy and protect jobs if the UK crashes out of the EU without a deal at the end of the month. The group called on Government to set out a multi-annual funding framework of State Aid support in next week’s budget, worth €1.5 billion over the next three years.

Ibec Chief Economist Gerard Brady said: “A ‘no-deal’ exit would deliver a major shock to rural economy. Those most vulnerable to job losses are already living in areas with fewer opportunities, a lack of other viable employment and lower incomes. The companies most exposed are both capital intensive and low margin. If firms collapse in a no-deal scenario they will not be easily replaced. Decisive and far-reaching government intervention would be required to protect jobs and support vulnerable, but viable, firms from day one. The risk of a ‘no deal’ is imminent and action is required immediately.”

The new Ibec report calls on Government to take the following key steps:

• To save viable but vulnerable companies in trouble: Reintroduce an enhanced Enterprise Stabilisation Fund in the same vein as was available during the financial crisis in 2009. This would fund viable companies in temporary difficulty due to a no-deal Brexit, and would, by achieving a sound, robust and sustainable business plan, allow them to be financially viable in the medium term
• To maintain jobs in viable but vulnerable firms where short-time work is not possible: Introduce an employment subsidy scheme, with subsidies up to €10,000 over 24 months for employees in firms in distress.
• To assist with cashflow in SMEs: Accelerate the current SME credit guarantee scheme’s coverage of invoice discounting and factoring arrangements in Brexit impacted firms, in-line with State Aid rules. 
• To help companies diversify: Introduce a new scheme for export credit insurance aimed at companies impacted by Brexit and diversifying away from the UK. 

“Timing is of the essence. Our experience from 2009 shows that it took 10 months from agreement on a State Aid framework at a European level until companies could draw down supports. In a no-deal scenario, if supports were not available until the middle of 2020 it would be far too late to sustain enterprises and jobs in many areas. It is imperative we introduce legislation and have structures in place to administer these schemes as soon as possible. The measures could be partly funded by new tariffs that will have to be levied on Irish imports from the UK,” concluded Mr Brady.