Irish exporters feeling pressure of long term Brexit uncertainty
The Irish Exporters Association (IEA), the voice of Irish exporters, has released results of its most recent survey, the ‘IEA Export Eye,’ conducted with members regarding Irish exporters’ sentiments on critical issues that have both direct and indirect impacts on business. The areas members were surveyed on include: ‘Brexit’ and its impact on business; entrepreneurship and the current Irish business environment; cost competitiveness; diversification of export markets; and the skills shortage in Ireland.
The IEA collated these findings to supplement its Pre-Budget Submission 2018 which was issued to the Department of Finance last week detailing key recommendations ahead of this year’s Budget. A copy of this submission can be viewed at the following link: http://bit.ly/IEABudgetSubmission2018
Simon McKeever, Chief Executive of the Irish Exporters Association commented: “The IEA regularly survey our members so that we can effectively lobby Government for the key supports that Irish exporters need to operate in a business friendly, competitive landscape. Our key recommendations to Government for Budget 2018 included: state aid to provide subvention/compensation for companies overly exposed to sterling fluctuations; significant and strategic investment in Irish regional infrastructure including road networks and broadband connectivity to retain and grow investment, jobs and population regionally; more and faster direct services to continental Europe; restructuring the National Training Fund to increase training opportunities for those in employment and increasing awareness of apprenticeships in Ireland; more resources in high-growth markets and rapidly developing markets that support international trade; and increasing the cap of the Earned Income Tax credit and the ceiling of Capital Gains Tax to compete with the UK. It is critical for the Government to recognise how vital Irish exporters are to our nation’s economic growth and use this year’s budget to maximise the opportunities that arise from an increase in global demand.
“We are now one year on from the UK voting to leave the EU and the prognosis for the Irish export industry shows that the impact will be severe. Our latest survey results are showing exporters are over-reliant on trade with the UK and some members are reporting their exports to the UK are decreasing. The extended period of uncertainty and the impact that this is having on sterling is hitting them hard.
“Only 3% of IEA members surveyed feel that the Irish taxation system is supportive of the self-employed and poor regional infrastructure in roads and broadband is affecting businesses around the country. Investments need to be made strategically to maintain long-term growth and sustainability and in particular to help industry deal with Brexit. This will not only encourage and grow indigenous Irish business but grow investment and pragmatically encourage FDI throughout the country.”
Key findings from the survey include
– 93% do business with, or export to, the UK
– 47% of exporters surveyed export more than 25% of goods or services directly to the UK (7% export more than 75%)
– Since the UK Referendum in June last year 21% of IEA members surveyed have said that their exports to the UK have decreased (6% have decreased more than 20%). 17% have increased and 62% have remained at the same level. A further 12% plan to decrease their level of trade over the next 6 months.
– Having done an impact assessment on the impact of Brexit to business, 79% see negative implications resulting from exchange rate fluctuations, 89% from customs procedures and 84% from border controls
– 55% of those dealing in sterling have 0% of the next 12 months £GBP receipts hedged
- Entrepreneurship / business environment
– Members thought that the Irish residential market (68%), poor broadband (61%), skills shortage (53%) and poor regional road networks (51%) would dissuade companies from investing in or relocating to Ireland
– 83% predominantly use Dublin sea port and 81% use Dublin airport but members have said that if there were more frequent sailings/flights, road networks were improved or ports/airports were upgraded they would consider using an alternative
- Cost Competitiveness
– 65% of members say that their cost base has increased in the last 6 months. Members have identified price increases in the cost of labour (72%), insurance (70%), exchange rates (63%) and raw materials (55%)
– Only 3% of IEA members surveyed feel that the Irish taxation system is supportive of the self-employed
– 35% of IEA members surveyed stated that their fixed broadband or Wi-Fi connection was not of a sufficient speed or quality to meet their business needs. It is worth noting that of those members whose main Irish operation was located in a rural area, 57% said that their fixed broadband or Wi-Fi connection was not of a sufficient speed or quality to meet their business needs
- Diversification of export markets
– The IEA are seeing growing interest from members planning to diversify export markets to China (9%), USA (9%), India (8%), Germany (7%), South America (7%) and Canada (6%)
- Skills shortage / war for talent
– 66% stated that there were vacancies in the company in the last 6 months for which there was difficulty experienced in trying to find candidates that met the minimum criteria for the positions. Of these, the most difficult positions to fill included: engineering (20%), sales & marketing (19%), transport logistics (16%), supply chain (15%), operations (14%), quality control (14%), process & manufacturing (11%), administration (10%)
– The difficulties experienced in recruiting or retaining staff included: meeting salary expectations (41%), lack of available talent in Ireland (40%), competition in Ireland from other companies (25%), meeting benefits expectations (17%), cost of living in Ireland (16%), availability of affordable housing (15%), and income tax levels not attractive (11%)
– 43% are you planning to increase the number of employees in their company in the next 6 months