Government urged to establish new wage support scheme for Brexit-impacted firms

Food industry body says sector will need €700m in financial supports over three years

Large UK food and drink companies supplying the Republic are racing to secure extra storage space in Ireland as the risk of a no-deal Brexit at the end of December threatens their supply chains. Photograph: Alan Betson / The Irish Times

Large UK food and drink companies supplying the Republic are racing to secure extra storage space in Ireland as the risk of a no-deal Brexit at the end of December threatens their supply chains. Photograph: Alan Betson / The Irish Times

 

The Government will need to roll out a new wage support scheme for firms directly impacted by a no-deal Brexit, Food Drink Ireland (FDI) has claimed.

The group’s latest report estimates that the food and drink sector here will need close to €700 million in financial supports over three years to cope with the “economic disturbance” of Brexit.

With 50 days left before the Brexit transition period ends, the Ibec group, which represents the industry here, has published a report, highlighting the Republic’s exposure to Brexit – deal or no deal – and calling for a number of financial supports to be put in place to protect stakeholders.

Part of the financial support should go to what it calls “enterprise stabilisation”, which would see the Government fund a programme of wage supports for the worst-affected companies in the case of a no-deal scenario.

The scheme should be put on a scenario-contingent footing and be reintroduced on a temporary basis where firms are struggling due to immediate loss of income due to Brexit, it said.

In 2019, over 37 per cent of Irish food and drink exports, valued at €4.5 billion, went to the UK market, the report said.

This is in contrast to other EU member states, which typically see less than 10 per cent of their food exports go to the UK, reflecting the Republic’s unique exposure.

The report estimates that funds amounting to 5 per cent of the value of current annual Irish export sales to the UK will be needed annually from domestic and EU sources for at least three years to support the sector here. This equates to €225 million annually and €675 million over three years.

It recommends that these state aid supports and funds drawn from the EU’s €5 billion Brexit Adjustment Reserve be channelled into several areas, including aids to help companies invest in innovation and tap new markets.

Tariff support mechanism

In addition, it wants the money used to fund a tariff support mechanism, which will offset the tariff amount imposed by the UK on the most exposed sectors in the event of a no-deal and a shift to World Trade Organisation (WTO) tariffs.

This would allow industry to keep trading with its UK customer base, maintain its UK market position and avoid massive displacement of produce onto EU markets with consequent price collapse, it said.

“The Irish food and drink sector is by far the most exposed of any sector in any country in Europe to Brexit – deal or no deal,” FDI director Paul Kelly said.

“ Supports are urgently needed not just to save companies within the food and drink sector, but also the jobs, communities, and downstream suppliers reliant on them, including the farming sector and its longer-term sustainability,” he said.

The report comes as large UK food and drink companies supplying the Republic are racing to secure extra storage space as the risk of a no-deal Brexit at the end of December threatens their supply chains.

Stafford Lynch, a Dublin-based distributor of large brands including Tetley Tea and Wilkinson Sword razors, says it is fielding such demand from major UK companies and brands wanting to stockpile products given that it will have exhausted its own warehouse capacity by December.

The company’s chief executive Conor Whelan said space in Dublin will likely be at a premium until “greater clarity emerges” on Brexit.

Warehouse space let in the Republic rose 50 per cent in the third quarter from the second, “undoubtedly boosted by Brexit”, said Garrett McClean, executive director of industrial and logistics at global property consultancy CBRE Group.