Dáil Éireann Debate, Thursday - 23 November 2017
47. Deputy Bernard J. Durkan asked the Tánaiste and Minister for Business, Enterprise and Innovation the extent to which she has put in place, or is putting in place, measures to offset the impact of Brexit here with particular reference to exports and imports with the UK; and if she will make a statement on the matter. [49776/17]
Amharc ar fhreagraThe UK decision to exit the EU will have direct and profound impact on many key policy and operational areas across DBEI and its Agencies. In advance of the Referendum my Department conducted a contingency risk assessment of the potential impacts of Brexit across policy areas of my Department. Given that the EU’s initial negotiating position is now clear, all of Government is intensifying its focus on the economic implications of Brexit, including on domestic policy measures to reinforce the competitiveness of the Irish economy, to protect it from potential negative impacts of Brexit, and to pursue all possible opportunities (e.g. foreign direct investment) that might arise. My Department is central to the Government wide effort to prepare our economy to respond to Brexit.
On 9 November, I published “Building Stronger Business: Responding to Brexit by competing, innovating and trading”. This paper sets out work underway, and planned, by my Department and its Agencies in response to Brexit. The paper summarises the impact of Brexit across key policy areas within my Department and outlines the policy and operational measures underway and planned by my Department and its Agencies to respond to Brexit, including supports available to companies to help them prepare for Brexit, regardless of the deal that emerges from the Brexit negotiations.
Building Stronger Business also describes the research programme underway in DBEI to inform that response, as well as new structures put in place to ensure a coherent approach across the Department and its Agencies.
Enterprise Ireland has set strategic ambitions to increase client exports by €5 billion to €26 billion per annum by 2020 and to support clients in the creation of 60,000 new jobs, as well as sustaining the existing 200,000 record level of jobs. EI will achieve these ambitious objectives by:
- Increasing the levels of diversification of EI client companies into new export markets, with two thirds going beyond the UK;
- Improving the competitiveness of EI client companies through Lean programmes;
- Driving the innovation in Irish enterprise through new supports to reach a target of €1.25 billion in R&D expenditure per annum by 2020; and
- Inspiring more companies to have Global Ambition.
IDA Ireland is constantly engaged with clients across its entire portfolio and in the months leading up to the UK referendum it engaged with clients and prospective clients in relation to the potential impact of BREXIT. The IDA has a Team involved in strategic scenario planning, which continues to work on ensuring that the Agency’s strategy is fit for purpose in light of the referendum results in the UK.
IDA Ireland will:
- Continue to engage with current and prospective clients on Brexit and the potential implications of the UK’s departure from the EU for their investment decisions;
- carry out updated analysis and research on the FDI risks and opportunities associated with Brexit. This will include assessing new feedback from IDA clients on issues relating to Brexit;
- continue to hold events in key international locations, to promote Ireland as an attractive investment destination in the post-Brexit environment.
InterTrade Ireland provides a targeted portfolio of programmes to help businesses, especially SMEs, develop capacity in the areas of science, technology & innovation and sales & marketing. Given its role in promoting and supporting North- South commerce, ITI is especially well-positioned to help businesses both prepare for and address challenges that Brexit may present for cross-border trade. With that in mind, the Department has put in place two specific ITI Brexit initiatives.
- The Department funded a research project undertaken by the ESRI for InterTrade Ireland. This study provides useful data on the extent and concentration of cross-border trade, including information on this trade by product, firm types and barriers to trade.
- Additional funding was provided to ITI to undertake a range of initiatives for SMEs in the Republic of Ireland who are trading with Northern Ireland, to help them adapt to the changed circumstances following the UK’s withdrawal from the EU. In May, InterTrade Ireland utilised this funding to launch a new dedicated ‘Brexit Advisory Service’. This Service offers businesses a number of supports, including vouchers (valued at €1,000 allowing them to fund specialist advice), technical and commercial advice, information on currency hedging and an interactive information tool explaining the technical language related to Brexit.
In addition, ITI is establishing a Sectoral Advisory Panel, consisting of experts with hands-on exporting experience in specific sectors, to help ITI assess the impact of Brexit changes on particular sectors as negotiations evolve.
In terms of the research projects underway in my Department, studies are being done to enhance our understanding of the possible implications of Brexit on Ireland for enterprise, consumers and trading relations and will take account of potential changes to the conditions facing exporters and importers. These studies examine a range of scenarios and will provide an evidence base to inform Ireland’s policy positions as part of the wider negotiation on the UK’s future relationship with the EU and will help us to continue to develop further mitigation measures to respond to Brexit.
These studies include a study examining the Import Content of Irish Exports: Implications of Brexit for Inputs and Competitiveness and the extent to which Irish firms source intermediate inputs from the UK. This research will provide empirical evidence on the import content of Irish firms’ exports, how firms may be exposed to changes in the trading environment after Brexit and the impact of Brexit on inputs, and competitiveness.
In addition to these studies, the Action Plan for Jobs and Enterprise 2025 are part of a range of policy documents setting out our overall approach to enterprise policy.
Enterprise 2025 sets out a long-term ambition and strategy to encourage and facilitate enterprise growth and job creation. This document addresses the broader enterprise environment and also sets out the rationale for a range of enterprise supports. As part of DBEI’s overall response to Brexit, a review of Enterprise 2025 is currently underway to determine the extent to which the policy framework and priorities set out in Enterprise 2025 remain robust in light of recent significant and potentially disruptive changes in the global environment, with a particular focus on Brexit.
The Action Plan for Jobs has been an essential tool from a competitiveness perspective and has been successful in driving coordinated actions to improve job creation, broaden the export and enterprise base, and enhance competitiveness. APJ 2018 will provide a platform to develop and implement immediate, short terms actions to support enterprise and address the challenges which firms are already facing as a result of the UK’s decision to exit the EU.
Budget 2018 contained some important pro-business measures to help companies compete in the face of Brexit including:
- New €300 million Brexit Loan Scheme for Business;
- Doubling of additional DBEI Brexit related agency staff to 100;
- New €25m Regional Fund Competitive Call from Enterprise Ireland;
- Tax package to support Enterprise and investment to attract jobs to Regions;
- Investment in PhD & Research Masters Programme to meet enterprise skills needs;
- SFI Research Centres to increase from 12 to 17 with new Capital funding; and
- Ireland to become a member of European Southern Observatory in 2018.
I also secured an additional €3 million in current funding in both 2017 and 2018 to recruit up to 100 additional staff, specifically to assist in the response to the evolving Brexit situation. As well as supporting Brexit-related staffing within my Department, these resources have been distributed across Enterprise Ireland, IDA Ireland, Science Foundation Ireland and the Health and Safety Authority. These additional resources will be assigned to both overseas offices in markets that are growing and have scale and markets where we are already well-established but with potential for further growth. Irish based posts will address a range of Brexit issues, including the support for internationalisation activities, a strengthening of the LEOs ability to respond locally to help micro-enterprises, and enhanced support for innovation.
It is essential that Government supports are definitively targeted at vulnerable, but viable companies. My Department is developing specific supports for companies to mitigate these impacts. In response, working in partnership with the Department of Agriculture, Food and the Marine, DBEI has secured Budget funding for a Brexit Loan Scheme which aims to make up to €300 million available to businesses with up to 499 employees at a proposed interest rate of 4 per cent. The scheme is open both to State Agency clients and those businesses that do not have any relationship with State Agencies. The finance will be easier to access, more competitively priced, and at more favourable terms than current offerings.
Additional measures compatible with the EU State Aid framework are also under active consideration:
- A longer-term investment loan guarantee scheme which would focus on Business Development to allow SMEs to invest for a post-Brexit environment and to address potential disruption that might arise (i.e. new market entry and development costs, trade facilitation requirements, new trading arrangements and possible tariffs, transport costs and trans-shipment costs, changes to regulations and standards and border controls and certification). It is intended that the Scheme will operate under the State Aid General Block Exemption Regulation.
- A rescue and restructure scheme was pre-notified to the Commission at the end of August. It is envisaged that this scheme would apply to all SMEs in the manufacturing or internationally traded services sectors, as well as to the fisheries and aquaculture sector, and SMEs engaged in processing and marketing in the agricultural sector.
In addition to these measures, it is proposed that a Business Advisory Hub be established which would focus on business development to allow enterprises to position them for a post-Brexit environment. This would build on the existing supports available and on work being undertaken by Enterprise Ireland, the Local Enterprise Offices and the Credit Review Office.
