Brexit: Businesses face potential ‘chaos’ given uncertainty

TDs told lack of detail on what will happen is leaving firms ‘preparing for the unknown’

Brexit: ‘A deal would be terrible; a no-deal would be absolutely unbearable’

Brexit: ‘A deal would be terrible; a no-deal would be absolutely unbearable’

 

Businesses cannot fully prepare for Brexit until they know what rules will apply on trading with Britain after it takes effect on January 1st, the Oireachtas enterprise committee has heard.

With less than a month until an economic Brexit, business, trade union and Border community leaders expressed serious concerns to the committee about the lack of information on what will happen next month given that EU-UK negotiations on a trade deal are continuing.

The committee heard there was potential for “chaos” in January, and how “catastrophic” Brexit could be for certain industries and regions.

Fergal O’Brien, director of policy and public affairs at Ibec, said businesses were “preparing for the unknown in uniquely challenging circumstances”, facing the dual threat of “continued, extraordinary uncertainty faced by Brexit combined with the evolving consequences of Covid-19.”

In the absence of a trade deal “there remains significant gaps in clarity” on the rules that will apply to businesses trading goods with Britain from the start of next year, said Mr O’Brien.

Even a “bare bones” trade deal under negotiation between the EU and UK would be “vital for Irish business” and would “crucially avoid” costly international tariffs and quotas, he said.

“If such a deal is not agreed, it would be a further blow to fragile confidence, reduce GDP growth in the short run materially and impair potential recovery in future years significantly,” he said.

Raising concerns about Brexit having major consequences on employment, Patricia King, general secretary of trade union Ictu, said a no-trade deal Brexit could cost up to 10,000 jobs.

She criticised Government departments for the lack of enthusiasm and speed in taking ownership of developing a short-time work scheme for companies temporarily affected by Brexit, where workers put on a shorter working week might have their income supported.

Mr O’Brien said the Irish food and drinks industry faced “an unbearable cost” of €1.5 billion if tariffs were introduced, and cannot plan ahead without knowing whether they will be introduced.

“[At] less than four weeks out, how are companies expected to price their product?” he said.

Ms King said 83 per cent of people working in food processing and manufacturing live outside cities where it would be difficult to redeploy them or to replace those jobs.

One of the most difficult consequences of Brexit, particularly in a no-deal scenario, would arise if UK did not agree to a “level playing field” with the EU on workers’ rights, she said.

This would put “huge pressure” on companies trading with the UK after Brexit and on workers, and amount to “a new dawn” heightening the possibility of industrial disputes here.

“The pressure will come in Ireland to emulate those terms and conditions on a labour-cost basis. That, in my judgment, has huge potential to cause great fractiousness between workers and employers,” she told the committee.

Border region

Businessman Tom Murray, a member of the Border Communities Against Brexit group, said businesses did not yet know whether imports and exports could move freely from January, what level of paperwork would be required and what VAT schemes and other levies would apply.

“We are potentially facing chaos with a lack of instruction and a lack of clarity and we are less than 30 days out,” he said.

He called for urgent investment plans for the Border region, pointing to anecdotal evidence of youth unemployment in the Border region being between 40 and 50 per cent.

Fine Gael TD David Stanton described the situation facing businesses from Brexit as “horrific” and said the consequences of the UK’s exit “has been obscured by the fog of Covid”.

“A deal would be terrible; a no-deal would be absolutely unbearable,” he said.

Pointing to an Enterprise Ireland survey showing 42 per cent of businesses were not prepared, he said: “How can any company be prepared if they don’t know what to be prepared for?”

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