Food Drink Ireland publishes new economic analysis Brexit report
In 2019, over 37% of Irish food and drink exports, valued at €4.5bn, went to the UK market. In contrast, other member states typically see less than 10% of their food and drink exports go to the UK market. Irish food products account for seven of the ten most exposed country/ food and drink product matches in the EU, with significant additional costs for Irish food and drink companies potentially arising from additional customs procedures, regulatory burdens, and rising transport costs.
Along with this, Food Drink Ireland research shows the sector has a high employment multiplier effect, supporting employment in other diverse sectors within the economy. Over the past decade, the food and drink sector has spent over €120 billion in payroll and purchases in the Irish economy, accounting for 45% of the total of all manufacturing exporters. €82 billion of this amount was purchases of materials from primary producers and other domestic firms in their supply chain. Intermediate purchases made by food and drinks producers from the agriculture sector in 2012 made up 85% of the total external product flows from the agricultural sector. This level of purchasing is the main facilitator of farm incomes and investment in the Irish economy. Failure to address the serious economic disturbance that will follow the end of the Brexit transition period would have devastating effects on the wider economy.
The report holds that funds amounting to 5% of the value of current annual export sales to the UK will be needed annually from domestic and EU sources for at least three years. These state aid supports and funds drawn from the EU’s €5 billion Brexit Adjustment Reserve should be targeted as follows:
- Enterprise stabilisation
- Investment in competitiveness
- Improve export capability
- Diversification and Innovation
- Direct connectivity to continental markets
- Customs skills
In addition, a Tariff Support Mechanism will be required in the event of no deal:
- A fund to offset the tariff amount imposed by the UK on the most exposed sectors. This would allow industry to keep trading with our UK customer base, maintain our UK market position and avoid massive displacement of produce onto EU markets with consequent price collapse. The fund should also offset the impact of EU tariffs on indigenous manufacturers importing critical raw materials.
This economic analysis details the need for urgent support measures for the sector as it faces serious economic disturbance.