I thank the committee for the invitation to address members in respect of Brexit. When it issued its invitation, the Brexit landscape looked quite different from how it looks today. The agreement reached last week between the European Union and the United Kingdom on a revised withdrawal agreement and political declaration on the future EU-UK relationship is a welcome development. The agreement was endorsed unanimously by the European Council on 17 October and is now subject to ratification by the European Parliament, which I understand has indicated that it will await approval of the deal in the UK Parliament before it considers the agreement.
Critically, the deal has yet to secure approval in the UK Parliament. As members will be aware, last night the UK Parliament approved the second reading of the Bill aimed at ratifying the withdrawal agreement. This development is a positive signal from the British Parliament, although the timetable for the Bill envisaged for completion by 31 October was not approved. The British Prime Minister, therefore, has paused progress on the Bill until a response to the UK request for an extension beyond 31 October is received from the EU.
The President of the European Council recommends that EU leaders approve the extension sought by the UK and is consulting other EU leaders on the matter. The Taoiseach has today confirmed his support for President Tusk’s proposal to grant the extension sought. In so doing, he has made it clear it will be possible for the UK to leave before the end of January 2020 if the withdrawal agreement is approved by the UK Parliament before that date. There is still a way to go before we will have clarity on the process in the UK Parliament and it would be neither wise nor appropriate to speculate on the ultimate outcome of current proceedings in the UK Parliament.
The Government remains firmly convinced that ratifying the withdrawal agreement is the best way to ensure an orderly withdrawal. A no-deal outcome is in no one’s interest. Ireland has always said that, taking account of the circumstances of the UK request, we are open to an extension to facilitate an orderly withdrawal from the EU by the UK. This will require a unanimous decision of the European Council and President Tusk has indicated he is consulting EU leaders on the issue. While the possibility of a no-deal Brexit appears lower now than it did a fortnight ago, the Government is nonetheless continuing apace with no-deal preparations.
I fully recognise that the constant flux in respect of Brexit has created a deep sense of insecurity for citizens and businesses alike. It has also placed a considerable onus on businesses to engage in Brexit contingency planning and take costly mitigating actions. I hope there will soon be clarity on the direction of travel of Brexit, which will bring about much-needed certainty for businesses. My Department and the offices and agencies under my remit have been front and centre preparing businesses for all possible Brexit scenarios - initially for a more benign Brexit and, more recently, for a hard Brexit.
The committee's invitation asked me to address certain issues, including Brexit supports, engagement with businesses, forecasts on the potential impacts of a no-deal Brexit, stakeholders’ concerns, and supports for businesses in a no-deal Brexit. As members will be aware, it has been the strongly held position of the Government that a no-deal Brexit is to be avoided at all costs. The potential detriment to people’s lives, our economy and peace on our island has been evident from various analyses and studies undertaken since 2016. As I stated when presenting my Department’s budget for 2020, Ireland has never been better placed to deal with a large economic shock such as a no-deal Brexit, although it would undoubtedly present an unprecedented challenge.
Let us consider what has been achieved since the start of 2016. Almost 220,000 jobs have been created and the unemployment rate stands at 5.2%, the lowest since 2007. We are planning and investing for the future through Future Jobs Ireland; the nine regional enterprise plans and the regional enterprise development fund; and Project Ireland 2040, including the €500 million disruptive technologies fund.
In the period since the UK Brexit referendum in 2016, my Department and the offices and agencies under my remit, working with other agencies of the State, have been very busy preparing for Brexit. A full suite of financial Brexit measures and supports was put in place in budgets 2017, 2018 and 2019. Some of the most significant Brexit initiatives introduced include: Enterprise Ireland’s Brexit scorecard, the Be Prepared grant, the new market discovery fund and advisory clinics, local enterprise offices' technical assistance grant for micro-exporters, and Brexit mentoring and advisory services; Intertrade Ireland’s Start to Plan Brexit vouchers, Brexit implementation vouchers and Brexit advisory services; the €300 million working capital Brexit loan scheme; and the €300 million future growth loan scheme.
In addition, budget 2020 provided for a €650 million contingency fund available for the business, agriculture and tourism sectors in the context of a no-deal Brexit scenario. Of this, €110 million will become immediately available to my Department to support vulnerable but viable firms. This is the first wave of funding that will, if necessary, be used to activate four main schemes, which build on existing supports introduced in the past three budgets.
These four schemes are a €45 million transition fund for manufacturing and internationally traded services firms of fewer than ten employees; a €42 million rescue and restructuring fund for firms in all sectors with acute liquidity or insolvency problems; an €8 million transformation fund for larger firms, with €5 million for firms in the food sector and €3 million for firms in the non-food sector; and a €5 million micro-enterprise emergency Brexit fund which will be operated by the local enterprise offices in the form of repayable grants of up to €50,000. In addition, Microfinance Ireland will receive an extra €5 million to increase the loan ceiling from €25,000 to €50,000. An extra €3 million will be available for the Department's regulatory bodies for additional demands in market surveillance, accreditation and conformity. An additional €2 million will be provided to InterTradeIreland.
Ever since the Brexit referendum, my Department has regularly engaged with stakeholders. I regularly chair meetings of my Department's enterprise forum on Brexit and global challenges, which includes representatives from business and trade representation groups. I also chair meetings of the retail consultation forum. Through regular meetings of this forum, I have been able, with my enterprise agencies, to develop a wide array of supports to help businesses to prepare for Brexit. I have also chaired a number of round-table discussions with the main retail, grocery and distribution players to better understand contingency planning within that sector. Throughout 2017 and 2018, my Department held a series of stakeholder events on Brexit countrywide, focusing on my Department's policy areas. From July to September 2019, I hosted four Brexit outreach events in the Border region in partnership with the accountancy bodies of Ireland, the agencies of my Department, Revenue and InterTradeIreland. These events took place in County Donegal, where stakeholders from counties Leitrim and Sligo were invited; County Cavan; County Louth, where stakeholders from County Meath were invited; and County Monaghan. At these events I impressed on businesses the need to act quickly on a no-regrets planning basis across a range of actions, from supply chain management to customs procedures. I have also participated in panel discussions at other fora such as the National Ploughing Championships. Furthermore, I instructed my officials last September to email more than 220,000 companies on the register of the Companies Registration Office to encourage them to act now to prepare for Brexit. The enterprise and regulatory agencies of my Department have been highly proactive in their own right driving home their sector-specific messages. They have organised workshops, roadshows and stakeholder events nationwide as well as conducting national media campaigns to make businesses aware of the need for action in distinct sectors. Members may be familiar with, for instance, the radio advertisements currently running on the need for businesses to be aware of the changes in online retail business post Brexit.
In February 2018, my Department published the Copenhagen Economics study which examined the strategic implications arising for Ireland from changing EU-UK trading relations. The study examined the implications of Brexit for the Irish economy and trade and quantified the impact of possible new barriers to trade which might emerge as a result of Brexit. While all the scenarios examined in the study produced a result that was less favourable than a no-Brexit scenario, the economy is still expected to record strong, positive growth in the period to 2030. The report also highlighted a range of employment challenges in vulnerable agricultural and traditional manufacturing sectors and the disproportionate impact of Brexit on the regions. This analysis was conducted on the basis of no policy change, that is, of no mitigation measures being taken by Government or firms. In reality, extensive work and mitigation actions to prepare for the UK's exit, including a hard Brexit, have been undertaken by Government.
In my everyday engagement with businesses, as well as through the more formal channels of engagement referred to earlier, I know that businesses harbour a number of concerns. The area of new customs procedures on east-west trade, as well as checks and other controls on agricultural products, is of concern. Customs is an area that Irish businesses have not, in the main, needed to be overly concerned about but post Brexit, with the UK as a third country, that will no longer be the case. The Government has responded to the dearth in capacity of customs clearance agents by introducing Clear Customs, a specific initiative that combines training through Skillnet Ireland and financial assistance for recruitment, software, etc., through Enterprise Ireland. Concerns have also been raised about the ability at the ports of Dublin and Rosslare to manage extra capacity, including additional delays that could arise due to additional customs and phytosanitary checks. Again, the Government has invested heavily in additional infrastructure to handle additional traffic, including minimising the risk of delays. Importers and exporters need to be prepared for new customs and other agrifood controls to facilitate smooth running at the ports. I am also aware that businesses have been closely examining supply chain issues and that many have used the opportunity to diversify into other markets and to source product from other EU countries.
While the manner in which the UK will leave the EU remains uncertain, members can be assured that the Government is continuing to prepare for all scenarios, including a no-deal Brexit. The Government is fully aware of the vital importance of providing targeted measures to help those businesses that would be most affected by a no-deal Brexit. Budget 2020 is prudently framed and sets out a further range of measures designed to assist businesses, particularly indigenous businesses, that would be vulnerable but viable in a no-deal Brexit. As I said, given recent developments, a no-deal Brexit is looking less likely. However, until we have absolutely certainty, we must continue to prepare on the basis of such an outcome. My firm hope, which I am sure is shared by members of the committee, is that the agreement endorsed by the European Council last week will be agreed. We await the outcome of developments in Westminster in that regard.
