I propose to take Questions Nos. 219 and 220 together.
The Government is acutely conscious of the uncertainty created by Brexit and the need to consider the types of supports that Irish businesses require to address the negative implications of Brexit and maintain their competitiveness.
The UK vote has led to uncertainty in our trading relationships with the UK, resulting in large part from a degree of volatility in the Euro/Sterling exchange rates. Exchange rate fluctuations will pose real challenges for low margin exporting sectors reliant on the UK market. The volatility of exchange rates is clearly evident from developments over the last few months.
Given Brexit is likely to represent a structural shift in the UK trading relations with partners, short medium and long term responses are needed. These include market diversification, cost reduction, value-add, innovation and price repositioning. My Department and agencies are putting in place measures to address these issues for client companies.
My Department, along with the Department of Finance, the Strategic Banking Corporation of Ireland (SBCI), Enterprise Ireland (EI) and stakeholders (such as SFA, ISME, IBEC and Chambers) is in the process of conducting a structured engagement with industry. The purpose of this engagement is to deliver an evidence base, on which Government appropriate, tailored and targeted responses can be based to meet real identified business needs. Work on this is advanced and the outcome of this structured engagement may lead to further discussions on State Aid concerns.
The Deputy will be aware that EU Regulation No 1407/2013 (the de minimis Regulation) sets out the rules for granting small amounts of financial aid to enterprises which are unlikely to affect trade and distort competition (de minimis aid). Generally, public bodies are allowed to grant aid to a single undertaking of up to €200,000 over a 3 year fiscal period without prior notification or approval from DG Competition. The Regulation requires that the aid is ‘transparent’.
Specific arrangements on de minimis aid apply in the following sectors:
- road freight transport sector
- primary production of agricultural products
- production, processing and marketing of fishery and aquaculture products.
As part of the revision of the General Block Exemption Regulation (GBER) under the State Aid Modernisation Agenda, Member States and the Commission discussed a proposal to increase the de minimis threshold in 2013. A number of Member States suggested increasing the de minimis threshold to €500,000 over a three year fiscal period. The European Commission rejected the proposal on the basis that the amount was substantial and could distort the competition in the Internal Market. A more modest increase to €300,000 was also declined. The current State Aid framework does not allow for the re-calibration of aid intensity rates under the GBER or de minimis thresholds.
My Department has also initiated engagement with senior officials from the DG Competition to ensure Ireland can deliver the necessary supports to Irish enterprises within the EU State Aid rules. These discussions are by no means over and will continue to address all relevant State Aid issues, if and when, the need arises to discuss initiatives or proposed schemes.
