Failure of the EU to reach a deal with the UK will be “appalling” for Ireland and especially for the economy outside Dublin, the boss of Dairygold has warned.
Chief executive of the country’s largest farmer-owned dairy co-operative, Jim Woulfe told the monthly breakfast of Cork Chamber that no deal was the “worst case scenario” for Irish industry including agri-business, following Prime Minister Theresa May’s declaration pre-election that “no deal is better than a bad deal”.
Mr Woulfe said: “That would mean World Trade Organisation (WTO) tariffs on milk which would effectively be 50%. That is completely and utterly unsustainable. Ireland will be a loser after Brexit. Yes, Dublin will see some fintech (financial technology) jobs but outside the M50, we will be the big economic losers.”
He said Cork would be in the firing line if the worst-case scenario came to pass.
“Brexit is absolutely a Cork story with around 75% of Ireland’s cheddar cheese destined for the British market being produced in Cork county.
“For Dairygold, 25% of our milk pool goes into cheddar cheese production for the UK market so Brexit will undoubtedly have a profound impact unless we take appropriate actions.
“Dairygold is planning for the worst-case scenario and while we hope for a better outcome, we can’t take anything for granted given the political volatility of last 12 months,” he said.
Mr Woulfe said it was his hope that “common sense will prevail” and a deal will be struck.
“Brexit was decided on politics not economics. You can see from some figures like (UK Brexit negotiator) David Davis that they are thinking it up as they go along. Ideas are being spun out with no direction. We are now seeing the effects of inflation in the UK. That is the harsh reality. So while the posturing continues between London and Brussels, common sense will prevail hopefully,” he said.
Dairygold had spent €215m in capital investment over the past six years and had come through turbulent times in the past so would be ready for battle whatever scenario, he said.
“We had a clear vision — we planned and successfully executed one of the most ambitious capital investment programmes in our history — €215m over the last six years. Market evaluation, strategic planning and forecasting were, and continue to be, a core focus of our business agenda. Dairygold has a track record of overcoming great challenges but we’ve also harnessed opportunities in solving many of these challenges. Although we can never be certain of what the future holds, I firmly believe that what doesn’t kill you, makes you stronger,” Mr Woulfe said.
Mr Woulfe’s warning on Brexit was echoed by the British Irish Chamber of Commerce. The organisation’s head of Brexit research and support, Katie Daughen told the Irish Centre for European Law that the future of UK-Ireland trade is “wrought with challenges and uncertainty” as the exact impact of Brexit is as yet unclear.
Ms Daughen outlined the importance of the UK to the Irish economy, most notably to small firms, saying: “The UK is Ireland’s most important two-way trading partner. Ireland exports 16% of its goods and services to the UK while we rely on the UK for around 27% of our imports. The importance of the UK market to Ireland is even more significant when looked at in the context of our indigenous firms who rely on the market for 50% of their exports.”
She said Brexit is already starting to bite in the UK economy, with stagnant wages, growth in retail sales at its lowest since April 2013, and the consumer price index at its highest since April 2012. Businesses previously quiet about Brexit were finally beginning to lobby the UK government as reality set in, she said.
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