Irish exporters are not investing enough money to better protect their businesses in the run-up to Brexit, Enterprise Ireland has warned.
Despite reporting a record year of export growth across its affiliated companies and expecting that increase to continue, Enterprise Ireland warned that a hard Brexit and challenging trading conditions would negatively impact on export growth this year. It said Irish export companies should still be planning for a hard Brexit.
Brexit uncertainty has already impacted 40% of Enterprise Ireland client firms, with that rising to 60% in the food sector. Nearly 30% said their investment ability will be negatively affected by Brexit, with 40% expecting profitability to be hit.
Enterprise Ireland chief executive Julie Sinnamon said the level of R&D spend, by exporters, is the one element of the agency's targets for 2020 that is currently challenged. It is targeting a combined annual R&D/innovation investment of €1.25bn from client companies by next year. The figure for last year was around €970m.
Ms Sinnamon said companies investing in such areas are seeing 67% higher global sales than those which don't invest. She said it would be "impossible to say" how much a hard Brexit would wipe off export sales of client companies, but said the agency's focus between now and October 31 will be to help Irish businesses prepare for a hard Brexit by improving their competitiveness, innovation and diversificiation levels.
The UK remains the number one export market for Irish firms, but the dependency on Britain has declined to 33%, with Enterprise Ireland saying reducing that further is "a work in progress".
Last year saw a 6% increase in export value amongst Enterprise Ireland-linked firms to €23.8bn, with the agency saying it is confident of meeting its €26bn target for 2020, despite headwinds.
"Looking at the metrics we have so far this year - in terms of contracts secured and the feedback we're getting on a daily basis from our clients - our expectation is that we will continue to have strong results this year in export markets," Ms Sinnamon said.
Enterprise Ireland firms grew exports to North America by 6% last year. Exports to the eurozone grew by 8%. Within the eurozone, there are three markets - France, Germany and the Netherlands - buying €1bn worth of Irish exports a year.
More than a quarter of Irish business leaders view Brexit as being the single biggest risk facing their organisation, with nearly 90% of them still seeing Britain leaving the EU as having a negative impact on their business in the short term, according to the Institute of Directors (IoD). However, 71% claim to be sufficiently prepared for Brexit.
"We urge the Government to continue supporting businesses through this Brexit uncertainty to ensure business leaders in Ireland can continue to run their businesses in a way that delivers for both their customers and the Irish economy," said IoD CEO Maura Quinn.