Thursday, 31 January 2019

Ceisteanna (1)

Billy Kelleher


1. Deputy Billy Kelleher asked the Minister for Business, Enterprise and Innovation the emergency contingencies and supports in place to safeguard small and medium enterprises, SMEs, and export businesses in Ireland from a hard-Brexit scenario if the UK leaves the EU on 29 March 2019 with no deal in place; if a formal request will be submitted to the Director General for Competition seeking changes to state aid rules in advance of the March 2019 deadline; and if she will make a statement on the matter. [4743/19]

Amharc ar fhreagra

Freagraí ó Béal (7 píosaí cainte) (Ceist ar Business)

I thank the Office of the Ceann Comhairle and the Minister for accommodating me. What emergency contingencies and supports are in place to safeguard SMEs and export businesses from a hard-Brexit scenario if the UK leaves the EU on 29 March 2019 with no deal in place?

My Department and its agencies are working to provide extensive supports, schemes and advice to ensure that businesses are prepared for Brexit. These measures aim to assist businesses in identifying key risk areas and the practical preparatory actions to be taken in the coming weeks. Brexit is one of my top priorities and was central to my decision-making on the allocation of the additional €14.2 million in current and €65 million in capital funding I secured as part of budget 2019. For example, I provided an additional €5 million to the local enterprise offices, LEOs, €3 million to Enterprise Ireland, €2 million to IDA Ireland, €1 million to InterTrade Ireland, ITI, and extra staff for regulatory bodies of my Department to help businesses prepare for Brexit, together with funding for the new future growth longer-term loan scheme and the new IDA Ireland regional property programme.

The €300 million Brexit loan scheme, which was launched in March 2018, provides working capital facility of one to three years to eligible businesses with up to 499 employees to help them innovate, change or adapt to mitigate their Brexit challenges.

The future growth loan scheme was announced in budget 2019. Its purpose is to provide a longer-term facility of eight to ten years in order to support strategic capital investment for a post-Brexit environment. This €300 million scheme is jointly funded by my Department and the Department of Agriculture, Food and the Marine. Loans of between €50,000 and €3 million will be available to eligible Irish businesses, including those in the primary agriculture and seafood sectors, to support strategic, long-term investment in a post-Brexit environment.

In May 2018, the rescue and restructuring scheme was extended to include temporary restructuring support for those enterprises with acute liquidity needs.

Enterprise Ireland, EI, has established additional supports including a Prepare for Brexit online portal and communications campaign, an online Brexit SME scorecard, a Be Prepared grant and a new eurozone strategy to help SMEs broaden their export footprint beyond the UK. In addition, the agile innovation fund provides up to 50% in support up to €300,000. EI also recently launched a customs insights online training course to help all businesses understand how customs work.

To help build the enterprise capability under the regional enterprise development fund, EI invested in seven successful projects in the Border region, with a total funding allocation of more than €10.6 million.

Additional information not given on the floor of the House

As part of budget 2019 I also allocated an additional €10 million to the IDA Ireland regional property programme, which will prioritise investment in the Border region, with new advanced units to be built in Dundalk, Monaghan and Sligo.

The ITI Brexit advisory service provides a focal point for SMEs working to navigate any changes in cross-Border trading relationships arising as a result of Brexit. ITI has organised a series of awareness events focused on improving knowledge of customs processes and procedures and identifying actions that can be taken in areas such as logistics and supply chain management. To date, more than 4,000 SMEs have directly engaged with the Brexit advisory service.

ITI also offers a Brexit Start to Plan voucher scheme worth up to €2,250, which enables businesses to obtain professional advice on how best to plan and prepare for the UK's withdrawal from the European Union, with advice on specific areas such as tariffs, currency management, regulatory and customs issues and movement of labour, goods and services.

The LEOs are the first stop for anyone seeking guidance and support on starting or growing a business. They have organised various events to enable companies to learn about the potential impacts and opportunities of Brexit. In addition, 402 LEO clients have received one-to-one mentoring focused solely on Brexit.

The LEOs engage in a number of other schemes to help companies prepare for Brexit, including technical assistance grants for micro-export, which are offered as an incentive for LEO clients to explore and develop new market opportunities. Furthermore, additional capital funding of €5 million was announced in budget 2019 for local enterprise development.

The majority of these schemes are open to all SMEs and not just EI agency clients.

On state aid, in November 2017, a technical working group was established, comprising representatives from the Directorate General for Competition in the European Commission, my Department, EI and the Department of Agriculture, Food and the Marine. The objective of the group is to scope and design schemes to support enterprises affected by Brexit in line with state aid rules.

Much has been achieved by the working group, including the development of the future growth loan scheme and the expansion of Ireland’s rescue-and-restructuring scheme to include temporary liquidity aid. The group is working on opportunities to support enterprises in the food sector.

On 24 January 2019, I met the European Commissioner for Competition, Margrethe Vestager, in my Department. The focus of the meeting was the severe challenges that Irish businesses, especially SMEs, will face when the UK leaves the European Union and the need for appropriate and timely State supports. It was agreed that Irish officials will continue to work closely with the Commissioner’s team in addressing any state aid issues that may arise to ensure a rapid and appropriate response as the ultimate shape of Brexit and its firm-level implications become known. The Commissioner emphasised that the Commission stands ready to act urgently in mitigation against the impacts of Brexit on Irish firms.

The Department of Finance estimates that a disorderly exit of the UK from the EU will reduce Irish GDP and economic output by more than 4% over five years, and that unemployment would increase by 2%, which equates to 55,000 people losing their jobs. This uncertainty is worrying and, as we all know, it is out of our hands because we are dependent on what happens across the water. Is the Minister satisfied that her Department has planned for all possible contingencies to protect against a hard Brexit that we hope will not happen? She has stated that Brexit is one of her top priorities, which is important for business, enterprise and innovation.

I accept the figures that were announced by the Department of Finance, which relate to a no-deal Brexit. They show that in the event of a no-deal Brexit, our economy would grow but at a slower rate. The Department of Finance forecasts GDP growth of 2.7% in 2019, which is down from the budget 2019 estimate of 4.2%, while in 2020 growth is predicted to be under 1%, which is down from the forecast of 3.6%.

On jobs, by 2023 total employment would increase by approximately 178,000, although that would be some 59,000 below the budget 2019 forecast. Employment in 2020 would still be higher than this year but by a smaller amount than was previously forecast.

A broad range of supports are available through my Department and its agencies. I am satisfied we are doing everything possible to ensure that businesses are prepared for Brexit.

If businesses have not identified their risks or prepared, they should do so and avail of the wide range of supports that the Government has made available.

I turn the Minister's attention to state aid rules. The Government is still refusing to seek exemptions at EU level to introduce direct supports for exposed export businesses. This falls directly under the remit of the Minister's Department. On Tuesday, the Taoiseach confirmed at the IFA AGM that the Government had alerted the European Commission to the fact that we would seek emergency aid for the farming sector in the event of a no-deal Brexit. Has the Minister's Department made a similar request to the Commission on behalf of Irish businesses and exporting companies in other exposed sectors?

I met Commissioner Margrethe Vestager last week. She acknowledged that we had the greatest exposure to, and would be the most impacted by, Brexit. The EU stands ready to act urgently. There has been a great deal of contact between my officials and a team at the Commission's office and we have been doing a lot of work in that regard. I am satisfied that the Commissioner is fully aware of the difficult situation that Ireland will find itself in if there is a no-deal Brexit. She has reassured me that she will act quickly on any request that we might make.

I thank the Minister.