Business groups in the North and the Republic have combined in an unprecedented show of support for the Brexit deal following a week of political chaos in Westminster that sunk the pound and rattled Irish and British shares.
The statements may help embattled UK Prime Minister Theresa May to garner support for the withdrawal deal she struck with the EU in the face of the barrage of opposition from Brexiteers, the DUP, the SNP, as well as UK Labour Party leaders.
Following sterling’s crash earlier in the week, there were some signs of stability for the UK currency, but markets are still braced for more turbulence in the weeks ahead as she fights for her own job and to win unlikely support in the Commons for the Brexit deal.
Business group Ibec — the main representative body in the Republic — joined with the CBI in Northern Ireland to voice their support for the deal.
“This draft withdrawal agreement allows for negotiations to begin on that much-needed comprehensive UK-EU agreement on future relations which will hopefully ensure frictionless trade for firms both North-South and East-West and so protect the all-island economy,” Ibec and the CBI said in a joint statement.
Separately, almost all the business groups in the North, including the Federation of Small Businesses, the Institute of Directors, and the NI Chamber of Commerce, also put their support behind the deal signed off between the government of UK prime minister and EU chief negotiator Michael Barnier.
“The draft withdrawal agreement is a welcome step forward which provides some much-needed clarity that local businesses have been calling for,” the Northern business groups said, adding they feared most a no deal that could lead to the UK crashing out of EU in March.
“While by no means perfect, it provides a platform to move onto the critical next stage and allows work to begin on the formulation of a comprehensive future trade deal,” they said.
CBI NI director Angela McGowan said: “Companies across Northern Ireland simply could not cope with a no-deal Brexit.
“Such a scenario would risk jobs, investment, and living standards.
“This latest agreement between London and Brussels provides local firms the potential for a guaranteed transition period and an assurance that their supply chains will not be disrupted under any future scenario.”
And Ibec’s director of policy Fergal O’Brien said bolstering the benefits of the Good Friday Agreement “and the all-island economy” was “vital”.
“The deal includes very welcome provisions to minimise disruption to all island economic activity and avoid a hard border. This will benefit businesses in Ireland and Northern Ireland and will safeguard thousands of jobs and livelihoods across the island. Swift ratification is vital,” Mr O’Brien said.
The statements from the leading business groups followed a significant statement from the Ulster Farmers’ Union (UFU) chief, who also said it “cautiously” welcomed the agreement as a way of avoiding a hard Brexit.
“Agri-food is the cornerstone of the Northern Ireland economy and any significant barriers to trade between NI and EU member states, NI and the Republic of Ireland, or NI and Great Britain would have a major impact,” UFU president Ivor Ferguson said.
“Ultimately, we would like a UK-wide solution — full stop. However, this agreement does provide an insurance policy to prevent a no deal outcome, which would be disastrous for farm businesses and the economy in Northern Ireland.”
The shares of Irish companies most exposed to the British market because they depend on revenues priced in a plunging pound in Britain or selling across the Irish Sea continued to show jitters. Dalata Hotel Group fell again, by more than 0.5%, while ferry group ICG slid almost 2%.
After taking huge hits earlier in the week, Irish bank shares fared better. Shares in Bank of Ireland, which has a significant lending operation through the British Post Office, were slightly lower, while AIB shares ended slightly higher.
Following its hefty losses earlier in the week, property firm Glenveagh surged 5% in the latest session.
KBC Bank Ireland chief economist Austin Hughes said that the growth in Irish house price inflation was slowing, but added that “how bumpy further progress in this regard may be in coming months could be significantly influenced by Brexit developments.”
Against the euro, sterling weakened to 88.95 pence.
Chris Beauchamp, chief market analyst at online broker IG, said that the UK prime minister and sterling “were not yet out of the woods”.
“The working week finishes with Ms May still in power, a prospect that looked doubtful just 36 hours ago.
“However, the volatility is not over yet for GBP traders, who must now gird themselves for the real possibility of a no-confidence vote that might upend the Brexit process just as we started to get some clarity,” Mr Beauchamp said.
Senior market analyst Fiona Cincotta at City Index sad the decision of Brexiteer Michael Gove to stay in the cabinet had eased the pressure for the time being on Ms May.
In London, the Royal Bank of Scotland (RBS) extended losses, ending 3% lower. “Losses for RBS across the week stand at over 14% as investors price in the possibility of Jeremy Corbyn taking power and breaking up the bank. That is clearly a trade no one wants to be on the wrong side of,” Ms Cincotta said.
“Political analysts believe that the odds are in Theresa May’s favour to win a vote of no confidence, purely because there is no suitable alternative who won’t spilt the party. However, even if Theresa May does win, she will still have the enormous task of trying to get the deal through parliament, the prospects of which look dubious at best,” she added.
Capital Economics in London said that British shares exposed to the UK economy, including property, banks, and utilities were hit hard. “In another echo of the aftermath of the referendum, small-cap equities, which tend to be sensitive to domestic developments and benefit less from a weaker currency, significantly underperformed,” it said.
In its latest post-bailout report, the EU reiterated that the growth in the Irish economy faces risks of Brexit and other “changes to the international taxation and trade environment”.
Meanwhile, business advisers Deloitte and PwC advised Irish firms to buckle up.
“Businesses who have taken a ‘wait and see’ approach to Brexit need to get the ball rolling on their plans and be prepared for all scenarios. The impact on supply chains and access to talent are high on the agenda… Ultimately, businesses need to be ready to adapt to whatever outcome — those that can do so quickly will be the winners in the long-term.”
PwC said it continued “to advise businesses to plan on the basis of no-deal”.
Feargal O’Rourke, its Ireland managing partner, said that the “first hurdle” had been crossed.
But “there remain too many unknowns and it continues to be very hard for businesses to plan and make investment decisions.”