British budget to aid exporters

FOOD exporters stand to benefit from increased earnings thanks to measures – particularly a lowering of corporation tax – unveiled in the British budget earlier this week.

“Lower UK corporation taxes, higher VAT and the weak euro significantly boost the competitiveness of Irish exporters in general and food exporters in particular. Most of the Irish-listed food groups have significant British operations and a lower UK corporation tax should improve earnings,” according to Paul Meade of NCB Stockbrokers.

While pointing out that Irish drinks group, C&C – which is the second largest cider manufacturer in the British market through its ownership of the Magners, Blackthorn and Gaymers cider brands – is the obvious beneficiary due to the British Government’s decision to reverse its earlier decision of increasing duty on cider products; Mr Meade said that the likes of Irish-Swiss bakery group, Aryzta and Origin Enterprises could also benefit.

“Glanbia and Kerry’s exports from Ireland to the UK should also benefit, although Kerry re-configured its Irish food manufacturing business over the past two years to reduce its exposure to currency. Origin Enterprises could regain significant volumes for its food distribution business, which it lost when the euro was stronger,” he added.

The British Government is due to lower its corporation tax rate for overseas companies – from 28% – over the next three years, beginning in January.

The move in this week’s budget to raise Britain’s main VAT rate to 20% – and, therefore, almost in line with Ireland’s rate – has already been cheered on this side of the Irish Sea, with the hope that it will have positive knock-on effects for retailers in the Republic.

The planned 10% hike in capital gains tax for higher taxpayers, could also benefit NAMA, as €22bn of its incoming loans are being bought from British locations.