Jobs ‘at risk’ over export credits

SUBSTANTIAL numbers of jobs and critical exports will be lost due to the Government’s refusal to extend the export credit guarantee system to Irish-owned business.

The Irish Exporters Association (IEA) has said it is dismayed at the decision by Tánaiste and Minister for Enterprise, Trade and Employment Mary Coughlan not to extend the facility on the grounds that the sector is too small to merit inclusion.

‘’Effectively, the Tánaiste has decided it is not worth improving the export credit insurance options for Irish exporters on the basis that it covers only a small level of exports and is primarily one sector – the agri-food sector, and in one market mainly – the UK market”, said IEA chief executive John Whelan.

In doing so the minister has ignored the reality that the indigenous sector is the one heavily reliant on export credit insurance, he said. While accounting for just €14.3 billion or under 10% of total exports, it is responsible for half the jobs tied up in the sector.

In Ireland’s case, 43% of all indigenous exports go to Britain, two thirds of which are in agri-food.

As a result of this “lack of vision” by the Tánaiste and her officials many indigenous businesses will lose more exports and more jobs, the IEA warned in a statement.

It has taken the Tánaiste and her officials 12 months to reach this conclusion and in effect it has “put the €6bn worth of indigenous exports to the UK at high risk,” said Mr Whelan.

Food and drinks exporters face “a real struggle to retain their UK sales” due to profit margin erosion because of sterling’s ongoing depreciation and the need for bigger amounts of cash to fund an increasingly difficult British market.

In the third quarter, food exports to Britain fell by 20% on the prior year, said the IEA.

“The decision also puts Irish exporters out on their own in Europe without a state-backed credit insurance scheme”, he said.

Most other EU member states have supported their exporters with credit insurance backing.

Irish exporters have been placed at a competitive disadvantage as they try to increase sales in various other markets internationally where the transition from recession to recovery has started, he said.

At this point, those who can get export credit insurance will steal the march on those who don’t.

The demand for credit insurance, and secure cash flow, will increase as exporters try to expand to meet new sales opportunities. Employment subsidies are irrelevant if they cannot secure sales, he said.