Plenty of options open to Ireland to lessen the blow of a no-deal

Plenty of options open to Ireland to lessen the blow of a no-deal

The long trudge back to the workplace, to the lecture hall, schoolroom and play room, has begun.

One young relative – just months old – will embark on a process of separation from economically-active parents, one of many in this land of the long commute.

The rhythms of daily life are being restored, yet there is little that is normal about the Irish economy as we head into a period of deep uncertainty. We may wake up one morning close to the end of October only to discover that the nightmare of a chaotic British exit from the EU is over, but then again we may not.

We dwell on the prospect of chaos at our borders and beyond. Shops starved of favourite brands. Chemists emptied of familiar medicines.

The threat of shortages may be overstated

More insidious is the prospect of rising consumer price inflation during a lengthy period of disruption to supply chains.

This, in turn, could spark further wage pressures in what is a warmed up, if not overheated, labour market.

The real concern is that the country’s economy will become even more lopsided as areas away from the major urban centres bear the brunt of a downturn. Crafting an appropriate response will not be easy.

A major relook at the prevailing policy prescriptions will be required. The Government has secured EU backing for an increase in the aid fund to help Irish firms hit by Brexit to €200m from €20m. In reality, such funding – however welcome - is just a drop in the ocean.

A much larger transformation fund will be required. Nor should the taxpayer be expected to pony up all the resources required.

Our business leaders could play an important part in helping to fund the sort of restructuring of rural enterprises that may be required should a large chunk of our main overseas export markets be lost.

Many of these have, at one stage or other, benefited from the intervention of the taxpayer in some shape or form after their organisations experienced challenging times. A good example is Larry Goodman, who, back in 1990, found himself with his back to the wall and who ultimately benefited greatly as a result of the passage of emergency legislation establishing the examinership process.

Mr Goodman has since amassed great wealth through canny investments in property. He is far from alone in this regard.

We could benefit moreover in no small way from the sort of 'blue sky' thinking that leading entrepreneurs are capable of.

Denis Brosnan
Denis Brosnan

Kerry Group founder Denis Brosnan has devoted considerable time to the revival of the economy of Limerick. His insights and those of the people with whom he has worked closely could be drawn on.

There could also be scope for companies to assign bright young managers or executives to local projects. Our farming sector is already under the cosh. As suppliers, they find themselves in an unequal bargaining position. Our competition authorities continue to drag their heels as farmers resort to tactics familiar to those who recall the Sixties.

The impact of the fall in sterling is already being felt across the agri-business world. For some exporters, sterling at 92 to 93 cents is the point at which profit on goods exported turn into losses. Many will have no option but to continue supplying at a loss because of contractual commitments.

Banks could face an awkward series of decisions regarding clients.

Should the state step in to underwrite longer-term loans to businesses faced with hopefully short-term difficulty or should borrowers be encouraged as part of such a deal to enter into cash generating activities such as forestry?

How can manufacturers in outlying regions be best supported – along with transport providers – as delays mount up and markets, as a result, come under threat?

The signs of crisis are there for all to see. The average age of Irish farmers is now over 55. Barely 7,000 out of around 135,000 are aged under 35. Estate agent Sherry FitzGerald recently reported that land prices in the west had fallen for the third year in a row.

Plenty of options open to Ireland to lessen the blow of a no-deal

Brexit, the decline in sterling and the ongoing poor weather are held up for blame. So, will we now witness an upsurge in land sales and more top quality land falling into the hands of corporates and the wealthy? In a food challenged world, we simply cannot cede control of our land to external interests with little or no connection to the country.

The torching of the Amazon serves as a reminder that how food is produced has huge implications for our future.

Paradoxically, the frightening upsurge in deforestation in Brazil has thrown a lifeline to an Irish farming sector threatened by the Mercosur trade deal. It has also allowed the Taoiseach an opportunity to set about trying to rebuild his frayed relations with the farmers.

The challenges presented in global terms could not be greater. The role of the consumer is one that must be highlighted. Over a generation, we have grown used to a wide array of exotic foodstuffs. We may be returning to a place where local production is prioritised.

Is the Irish consumer-ready and willing to support local options by shopping in country markets? Is a generation of farmers that has grown used to large scale production and the use of pesticides ready to adapt?

The Government needs to consider tax breaks aimed at attracting firms away from often overcrowded urban areas. Enhanced tax incentives, aimed at encouraging start-up businesses, also should be considered.

Chambers Ireland has proposed short-term credits to be set against employer PRSI, along with a gradual reduction in capital gains tax.

Perhaps, a range of such incentives should be made available initially to those willing to establish businesses in towns and regions which have missed out on much of the recovery and which stand to be disproportionately affected by disruptions to trade and business relationships.

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