I am grateful for the opportunity to address Members on the important topic of Brexit and business. The date of 31 December 2020 is drawing in and this signals a major change for Irish businesses doing business with the UK as it exits the EU Single Market and the customs union. Businesses that move goods from or through Great Britain will be subject to a range of customs formalities, sanitary and phytosanitary, SPS, checks and other regulatory requirements that do not apply to such trade today.
I want to stress the importance for businesses to act now to get ready for the changes that we know are coming in January and to make it clear that these changes will happen regardless of the outcome of the negotiations between the EU and the UK on a free trade agreement.
Businesses have already had to deal with a lot of change this year. They have demonstrated that they can adapt rapidly to public health guidance and they will adapt to change again. The Government stands ready to assist and guide businesses in dealing with the changes that Brexit will bring, including both the changes we already know are coming and those that might come to pass.
The most recent round of Brexit negotiations concluded last week with Michel Barnier stating that there is still a considerable way to go before agreement can be reached. The European Commission President, Ursula von der Leyen, and the UK Prime Minister, Boris Johnson, also reviewed progress on the status of the negotiations in a call on Saturday, 3 October. While their joint statement noted that progress had been made, “significant gaps remained, notably but not only in the areas of fisheries, the level playing field, and governance”. They have instructed their chief negotiators to work intensively to try to bridge those gaps. We know that unlocking these outstanding issues is crucial in moving towards a more intensified phase of the talks.
A no-trade deal is in no one’s interests and we want to forge the closest possible relationship between the EU and the UK, although this cannot come at any cost. We cannot undermine the EU’s economic interests or the integrity of the Single Market and we must have a level playing field, that is, a set of common minimum standards. It is not acceptable for Great Britain to try to undercut us on standards when it comes to workers’ rights, the environment or health and safety. The EU is continuing to negotiate in good faith to try to achieve the type of future partnership with the UK that was described in the political declaration, agreed less than a year ago. That can only happen if the UK honours the political declaration and the withdrawal agreement, including the Irish protocol, in full.
Our aim is a zero-tariff, zero-quota free trade agreement, linked to a fisheries agreement, as well as measures to ensure that a level playing field will operate between the EU and the UK. I believe a no-quotas, no-tariffs agreement with some form of minimum standards and controls on state aid and fishing is still possible. But we are planning for the possibility that there will not be a deal. Our message to businesses is to get ready, because deal or no deal, things are going to be different.
In a nutshell, businesses need to get ready, get informed and get support.
We will focus on the businesses that could be worst affected, such as those in agri-food and small exporters. We want to help them to retain their market in Britain and to open up other markets, a task that is made all the more difficult by Covid-19 because of the restrictions on international travel.
Even the smallest businesses need to take immediate steps to understand the impact on their operations of the UK exit from the Single Market and customs union. They must be ready for changed customs and supply chains. Failure to engage with and comply with new customs rules and other regulatory checks will prevent businesses continuing to trade with Great Britain. In turn, this could lead to significant delays in moving goods to, from or through Great Britain from 1 January 2021. The Government is working in partnership with businesses as they face these challenges and has taken a multifaceted approach to assist and financially support businesses through essential planning. We have provided targeted grants and advisory services to assist with both these vital issues through our agencies, and I urge every business to engage now.
In early September, the Government published a Brexit Readiness Action Plan. This plan provides guidance and advice to business and individuals in a vast range of areas including trade in goods and services, customs and other sanitary and phytosanitary checks and controls, import duties, EU Single Market accreditations, use of the British land bridge, data transfer, recognition of qualifications, and many other issues. The plan provides clear advice on steps that need to be taken by businesses to deal with these many and varied issues come 1 January 2021.
The readiness work is complemented by a major national communications campaign under the Getting Ireland Brexit Ready brand. Despite the impact of Covid-19 and the approaching Brexit deadline, many Irish exporters are resilient and optimistic. A recent survey of Enterprise Ireland clients found that 57% expect to grow their exports in 2021, 83% intend to hire new staff in 2021 and more than eight in ten exporting companies are either confident or very confident about the international trading environment in 2021. This optimism is encouraging and the results are encouraging for this cohort of exporting companies but, of course, this view is likely to be different for SMEs that are more domestically focused and therefore need greater assistance from the Government.
New customs facilities will be the most immediate and visible impact on businesses on 1 January. All businesses that want to continue trading with Great Britain in January must, at a minimum, have an economic operators’ registration and identification, EORI, number. This identifier will allow them to submit the necessary customs declarations. It is positive that over 67,000 businesses now have an EORI number but I am concerned that many businesses, though a small percentage in terms of trade, have not yet registered with the Revenue Commissioners. As part of an intensified engagement, the Revenue Commissioners are now making follow-up phone calls to some 14,000 businesses it believes will be most significantly impacted.
The Government is also helping businesses to develop the skills and systems necessary to handle new customs requirements. As part of the July jobs stimulus, the Government announced a €20 million ready for customs package to help businesses to put in place the necessary internal arrangements, staffing, software and IT systems to be ready for the new customs arrangements and regulatory requirements. As part of this package, Enterprise Ireland launched a new ready for customs grant through which businesses can claim grants of up to €9,000 per eligible employee hired, or redeployed within the business, to a dedicated customs officer role. I strongly encourage businesses to avail of this grant to assist them in hiring or redeploying employees to a dedicated customs role. Enterprise Ireland is also running an online customs insights course for businesses dealing with customs for the first time. Some 1,000 businesses have registered for Clear Customs Online 2020 since its launch on 9 September. This free online training programme, provided by Skillnet Ireland, is also helping Irish businesses prepare for increased customs requirements.
Local enterprise offices are carrying out the second phase of their one-to-one successful Brexit mentoring and training Prepare Your Business for Customs workshops. These will commence this month and will be supported by a full awareness campaign to target small Irish businesses.
Enterprise Ireland, local enterprise offices and InterTradeIreland are providing a range of initiatives to assist with getting Brexit ready. These include planning vouchers, consultancy and mentoring, tariff advisory services, research on new markets and innovation. Enterprise Ireland has launched a Brexit readiness checker. The tool follows on from the Brexit scorecard and will produce a report assessing a company’s readiness for Brexit across a range of areas and signpost users to resources to assist them on their journey.
Enterprise Ireland’s Act On initiative is helping Brexit-exposed companies to create strong action plans to deal with areas such as financial and currency management, strategic sourcing, and customs and logistics. Enterprise Ireland will continue to help in the form of grants, mentoring and training to enable its clients to examine their exposure and their capability to meet both the challenges and opportunities Brexit presents.
InterTradeIreland’s Brexit advisory service offers a focal point for businesses working to navigate changes in cross-border trading relationships. The Brexit advisory service has proved popular, with over 700 SMEs directly engaging with it in 2020. As part of this service, InterTradeIreland has run a series of awareness-raising events to help improve knowledge of customs processes and procedures, as well as identifying actions businesses can take in areas like logistics and supply chain management. InterTradeIreland’s Brexit planning voucher enables eligible businesses to seek professional advice on how best to plan for Brexit. This voucher helps businesses obtain advice on specific areas such as tariffs, currency management, and regulatory and customs issues.
Local enterprise offices continue to offer their grants to business including the technical assistance for micro exporters, TAME, grant of €2,500 and the lean for micro grants to drive productivity improvements.
Financial assistance is also available through the Strategic Banking Corporation of Ireland, SBCI. For example, the Brexit loan scheme offers businesses the means to deal with short-term liquidity issues that could arise in buying stocks or for delays that could arise at the ports. To help businesses secure longer-term funding for investment purposes, the SBCI future growth loan scheme was expanded at the beginning of the summer in response to very high demand. It provides up to €800 million in lending to eligible businesses to support strategic long-term investment, including for a post-Brexit and post-Covid-19 environment.
The new €2 billion credit guarantee scheme, launched in mid-September, is the largest guarantee scheme that has ever been provided for Irish businesses to date to ensure that low-cost loans are available for Irish businesses as they rebuild both through Covid-19 and Brexit. We have also provided further funding to Microfinance Ireland to ensure it can meet the needs of microenterprises that cannot avail of bank funding over the coming period.
The Minister for Finance has indicated that budget 2021 will be framed on the basis of a no-deal Brexit and we will consider what further targeted measures to help businesses and affected sectors measures are needed in that context as the shape of the final trade deal with the UK becomes clear.
The launch of the Brexit Readiness Action Plan was accompanied by an intensified communications campaign under the Getting Ireland Brexit Ready brand. The campaign targeted small businesses, including shops, hauliers, farmers, fishermen and fisherwomen, and others who trade with the UK, who are most exposed. The campaign ran from 9 to 27 September with advertisements on national radio in English and Irish, as well as in the main daily, Sunday and regional papers. This campaign is now being followed up by specific sectoral campaigns. While it has raised awareness of the changes at the end of transition, we know that further work is needed.
This morning, I chaired a meeting of the enterprise forum on Brexit and global challenges. The group has been meeting on Brexit since early 2017. The role of business representative groups is crucial in getting messages out through their membership and we will continue to use this forum and others to help get the message out over the coming weeks.
Tomorrow, I will write to all 250,000 businesses that are registered in the State to inform them of the most important actions that they need to take in advance of 1 January and to provide them with a useful Brexit checklist of those actions and contact details of the Government agencies they can contact to help. The Revenue Commissioners have written to over 90,000 businesses that have traded with the UK since 2019 to advise them of the essential customs changes that lie ahead. That letter also included relevant information from the Department of Agriculture, Food and the Marine on exporting animals, plants and products of animal and plant origin. As I mentioned earlier, Revenue is following up this by way of telephone calls.
Earlier this week Revenue hosted a series of Brexit information webinar sessions covering a range of technical issues such as submitting customs declarations, understanding how the origin of goods is dealt with and managing goods in transit. My Department presented on the enterprise and financial assistance available.
Other agencies under my remit, such as the Health and Safety Authority, Irish National Accreditation Board and the National Standards Authority of Ireland, are actively engaged in a series of webinars this month and for the remainder of this year. I encourage Deputies to visit their websites and access the virtual events at any time.
As well as the challenges facing businesses in the customs and SPS area, changes are coming in the regulatory area due to the UK leaving the Single Market. EU law in the area of product standards and certification will no longer apply to Great Britain. This has a direct impact on businesses if they are, for instance, engaged in putting industrial goods on the EU market and had relied on the UK for product certification such as the CE mark.
From 1 January, UK notified bodies will no longer be authorised to certify the compliance of EU products with EU rules and standards in respect of specific regulatory controls, public safety, etc. For businesses that currently rely on UK notified bodies for conformity assessment certificates, it is essential that they source an alternative approved notified body established in Ireland or another EU country. This may involve transferring existing certificates to a notified body in another member state or obtaining new ones altogether. Many businesses have taken the necessary steps to address this issue. Businesses that source products requiring EU certification from the UK should engage with their EU-based notified bodies.
Other impacts in this area that businesses may need to consider include: requirements to register products on EU databases; requirements to be established in the EU; and requirements relating to the marking and labelling of goods. Manufacturers, distributors, importers and authorised representatives of industrial products must comply with their obligations and responsibilities under EU product legislation when placing a product on the EU market.
To provide clarity to businesses in affected sectors on the new procedures and requirements at the start of next year, a wide range of webinars are being hosted by Government Departments and agencies, as I previously mentioned. These webinars cover a wide range of issues, including implications for industrial products, how the supply chain may be impacted by Brexit, CE marking products post-Brexit and tariff classification.
The introduction of new import and export processes, along with enhanced checks and controls on trade between the EU and Great Britain, may lead to disruption in the supply chains for Irish-based retail and other businesses. It is important that retailers intensify their work on understanding and strengthening their supply chains in order to mitigate disruption and to limit potential congestion at the ports.
The food supply chain is a matter of the highest importance to the Government and my colleague, the Minister of State, Deputy Damien English, chairs the retail forum. He is looking at the issue closely. Along with other Departments, we will continue to work closely with stakeholders in the grocery retail and distribution sector to ensure that preparations are being undertaken by businesses to manage potential impacts on supply chains so as to minimise the risk of disruption in January.
To ensure the highest possible degree of efficiency at Dublin port regarding customs checks and SPS inspections, effective planning is being put in place by the relevant State bodies and this work is being overseen by the Department of Public Expenditure and Reform. To assist this sector in bringing business online, Enterprise Ireland administers the online retail scheme. The objective of the scheme is to help companies in the indigenous retail sector with a pre-existing online presence to respond to domestic and international consumer demand for a competitive online offer.
At European level, the European Council has approved the establishment of a €5 billion Brexit adjustment reserve to counter adverse consequences in member states and sectors that are worst affected by Brexit. We expect the European Commission to present a proposal by November and as one of the member states most impacted by Brexit, we are working with the Commission to ensure the allocation criteria for the fund are targeted at those member states and sectors most affected by Brexit.
The Minister for Foreign Affairs and Trade, Deputy Simon Coveney, met Commissioner Johannes Hahn in Brussels on 22 September and discussed with him Ireland’s priorities and the need to target the most exposed sectors. The Minister for Finance, Deputy Paschal Donohoe, and I met Commissioner Margrethe Vestager today and I will be engaging with European and Government colleagues over the coming weeks and months to ensure Ireland makes the best use of the measures available to help deal with Brexit and Covid-19.
As a small open economy, Ireland relies on external demand and international markets for sustainable and continued growth. Exports lead to sustainable job opportunities and growth in revenues for firms beyond that available in the domestic economy, while having a substantial multiplier effect across the entire economy in terms of jobs and tax revenues.
Export growth in recent years has been exceptionally strong, but should not be taken for granted. Ireland's overall export performance over the past ten years has been marked by year-on-year growth, with total exports of goods and services reaching a further record level of €366 billion last year. This strong performance makes a continued significant contribution to our economic growth. Indeed, despite the challenges posed for our economy, trade figures released by the CSO last month show that goods exports over the period from January to July increased by 6% compared to the same period in 2019.
We have experienced two recessions in the past 12 years. Many things make them different, but there is one thing that makes them similar, the fact that our multinational and export sectors have held up the economy. I do not think anyone can doubt the value of being part of a globalised trading system and making Ireland an attractive place for multinationals to invest. It is important that we never fundamentally change those economic policies that have ensured we will be able to export our way out of two recessions caused by very different reasons.
The Irish exporting landscape is strong and companies in Ireland have been succeeding in winning business worldwide for their products and services. While the UK is, and will remain, a major market for Irish companies, expanding the Irish export footprint in markets beyond the UK is a priority. In that context, Enterprise Ireland’s strategy is to help Irish exporters to be more innovative, competitive and market diversified.
Enterprise Ireland client companies achieved record levels of exports in 2019 against the backdrop of Brexit uncertainty. In 2019, the eurozone region, which is a focus of Enterprise Ireland’s diversification strategy, saw growth of 15%, with Germany, France and the Netherlands each exceeding €1 billion in exports. While Enterprise Ireland client companies’ exports to the UK increased by 2% in 2019, this accounted for only 31% of their exports compared to 42% in 2009. The ratio has been falling steadily since then and provides assurances that Enterprise Ireland’s diversification strategy is being successfully implemented.
Of course, retaining and strengthening Ireland’s reputation as a first-class destination for foreign direct investment is fundamentally important to our economic model. That is why IDA Ireland continues to work closely with international clients from a range of sectors to attract job-rich investment from overseas firms, often in the face of increasing international competition for high-value investment projects.
In doing so, the IDA has targeted new name investors and increased investment from companies already located here. The agency has also restructured its global footprint in response to Brexit and other global challenges. This expansion of the IDA’s presence overseas has allowed IDA staff to secure new investment opportunities from non-traditional target markets and to further diversify our sources of investment. The IDA continues to emphasise the core elements of Ireland’s value proposition for foreign direct investment, particularly those with increased relevance in the post-Brexit landscape such as EU membership, access to talent, the common law system and the English language.
Next month I will publish the national economic plan to set out a vision for what our post-pandemic and post-Brexit economy will look like. It will look to the future and set out how our economy can be positioned to exploit opportunities for growth in the emerging sectors and how we can embrace the twin transition, which will be digital and green. Drawing from the ambition of the programme for Government, it will set out how the State can facilitate new ways of working and prepare for the transitioning of enterprises and workers in response to technology and climate change developments.
We cannot get away from the fact that the trading environment with the UK outside of the EU will fundamentally change from 1 January. Our job is to encourage and work closely in partnership with businesses to help them work through these challenges and face the realities ahead. I sincerely regret that businesses must face these realities while dealing every day with the ongoing struggles the health pandemic presents.
I know it is a huge ask and I do not in any way underestimate the challenges. For our part, Government will assist businesses as much as possible to face the realities of the changes that will take effect on 1 January, to overcome them and to prosper into the future.