I am aware the Taoiseach briefed party leaders last evening about the Government’s plans on how to deal with Brexit. There is no doubt it is the single biggest challenge that all of us on the island of Ireland face. What we need is a coherent and multilayered response to deal with this issue. In the Taoiseach’s announcement yesterday, there were plans for forums and lots of dialogue, all of which are important. We also need, however, practical measures in the short term to assist businesses dealing with the fallout from Brexit.
This morning, the euro is trading at 88.2p sterling. Before the referendum in June, it was trading at 77p sterling. That means for Irish businesses exporting to the UK, their goods and services have, in relative terms, become 14% more expensive. That makes us 14% less competitive in our trade with the UK. Many analysts predict that sterling will fall further, with some even predicting it will reach parity with the euro in the next year or so. This already has cost jobs and will cost many more in the period ahead if this trend continues. On top of that, inbound tourism from the UK is inevitably going to be affected because it is more expensive. We are all well aware of the impact on Border communities of the fall in sterling and the deep uncertainty that now prevails about the Border post-Brexit. In addition, the very terms on which we will be able to trade with the UK post-Brexit are unclear and mired in uncertainty.
We must accept and prepare for the fact that Brexit is going to happen, possibly within a two and a half year period. We must also prepare for the fact and the possibility that it may not happen in an orderly way. Certainly, the UK Prime Minister's comments over the weekend have heightened the risk of a so-called “hard Brexit”. Next week’s budget presents an ideal opportunity to help businesses address the major challenge posed by Brexit. Fianna Fáil would like to see the 9% VAT rate on tourism and hospitality fully retained, unlike our colleagues, Sinn Féin.
We would like to see an improved capital gains tax regime for entrepreneurs and a real focus by Enterprise Ireland and other agencies on supporting exporting firms, which are very dependent on the UK market, to achieve greater market diversification. We want to see investment in infrastructure in the Border region to make us more competitive in that part of the island. The Government should establish a national hedging strategy, as recommended by the Irish Exporters Association. I ask the Taoiseach to read the association's budget submission because it addresses the very specific issue that has now come to the fore in terms of SMEs. It wants a strategy managed by the NTMA offering a discounted exchange rate to qualifying businesses. There must be a renewed focus on reducing costs - costs that the State can influence, be they insurance, transport or energy costs - to make us more competitive and to deal with the inevitable headwinds that Brexit will produce. There is an opportunity within a week to set out our stall and to help up to 800,000 employees who work in SMEs to deal with these major challenges.