Irish Exporters Association: Budget shows more action needed to prepare for a potential no-deal Brexit

Irish Exporters Association: Budget shows more action needed to prepare for a potential no-deal Brexit

Update: The Irish Exporters Association has cautiously welcomed today's budget delivered by Paschal Donohoe.

Among the measures welcomed by the group are a €300m Human Capital Initiative, a Future Growth loan scheme for SMEs in the SME, agriculture and food sectors worth €300m, and the provision of over €110m for preparation across a number of Departments.

However, it criticised the government's preparations for Brexit saying that they are based on the assumption that a deal will be done between the EU and the UK, ignoring the high risk of a no-deal crash-out by the UK.

"In particular, we are disappointed that the Government chose not to address the impact of the current Import VAT regime on Irish Supply Chains and potential cashflow problems on importers," said Simon McKeever, Chief Executive of the IEA.

"A six-month deferred accounting of the Import VAT scheme, as proposed by the IEA, would greatly support Irish businesses.

In the event of a crash-out Brexit, the impact on Irish Businesses’ from having to pay Vat on UK imports at the point of entry of up to 23% on some imports could seriously impact their cashflow and competitiveness.

"In addition, by only raising the Earned Income Credit for the self-employed by €200, the Government missed a prime opportunity to create a level playing field between PAYE workers and the self-employed."

The group also welcomed the allocation of €10.8bn for the Department of Education and Skills calling for some of the funding to be made available to companies to draw down on to avail of specific on-the-job competence building training.

"The IEA also welcomes the allocated funding of €950 million for the Department of Business, Enterprise and Innovation to support SMEs address the challenges posed by Brexit and increasing digitalisation.

"In this regard, we very much welcome the establishment of a Disruptive Technologies Innovation Fund worth €500 million under the National Development Plan."

Retail Excellence: Budget 2019 delivers 'a little to a lot'

The Industry body, Retail Excellence, has said the measures announced in today’s budget "do a little for a lot".

They welcomed Minister Paschal Donohoe's announcements on infrastructure, housing, tax reductions and the new Online Retail Scheme, but said the Budget represents a "missed opportunity" for Government to retailers.

They recognised that the modest reductions in USC, the increase in welfare payments and the restoration of the Christmas bonus represents "an ambitious plan by Government" to increase consumer sentiment and spend.

CEO of Retail Excellence, Lorraine Higgins, said: “Whilst such initiatives may lead to an increase in consumer spend, where this spend goes is critical to the industry we represent. With the huge growth in online purchases by Irish consumers from outside the EU we sought extra protections to ensure parity of tax treatment for retailers in Ireland from Distance Sellers.

“Currently the Revenue Commissioners are tasked with collecting VAT and duties on parcels being delivered to Irish consumers but it is physically impossible for them to intercept €14m worth every day."

“That said, we are delighted to see the Minister for Business Enterprise and Innovation double the investment in the Online Retail Scheme to €1.25m to support the digital online capability of retailers in Ireland.

However, Ms Higgins expressed disappointment at the Government's failure to retain the 9% VAT rate and to commit to incrementally reducing the upper rate of 23% "to those fearful of what Brexit will actually look and feel like".

"A situation exacerbated by the fact there were no town renewal investment measures announced. On the other hand, the allocation of funding of €950m for the Department of Business Enterprise and Innovation gives our industry confidence,” said Ms Higgins.

Lorraine Higgins.
Lorraine Higgins.

“On balance, Budget 2019 is ambitious and aims to give hope to most. However, more imaginative and targeted supports are needed to insulate the retail industry and the thousands of jobs it supports.

"Retail Excellence will continue to work with our members, the government and Oireachtas members to ensure such supports are supported and secured into the future.”

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