Enterprise Ireland has upped its warnings to client companies to fully prepare for Brexit becoming a reality in six months’ time as the impact of Covid-19 looks set to ravage the strong export gains they have seen over the last few years.
The agency in charge of boosting Irish company exports and international expansion has warned exporters face a “very challenging” second half to 2020 due to the dual impact of Covid and Brexit uncertainty.
While exports across the development agency’s 5,000 or so client companies rose 8% last year to nearly €26bn, the same record levels are unlikely to be repeated this year. New export contracts won by Enterprise Ireland-backed companies declined by 12%, year-on-year in the first half of 2020, and the agency said that around 1,000 of its client companies have been negatively impacted by Covid-19, with both exports and cashflow levels hit.
The agency said the first half of 2020 paints a different picture to 2019 and Irish companies trading internationally have been impacted in every market due to Covid-19.
Outgoing Enterprise Ireland CEO Julie Sinnamon said it is very difficult to project what the final outcome for this year will be, but it is unlikely 2020 export levels will be anywhere near 2019’s highs. However, she said it depends on the coming months if it will be a year of low growth, no growth or negative growth.
That said, she warned the second half of 2020 is expected to be one of the most challenging periods facing Irish businesses in recent years.
She said a lot of Brexit preparation work has been done over the last 12 months by companies, but that Covid automatically shifted the focus. Ms Sinnamon said that Enterprise Ireland will be intensifying its work with client companies to ensure they are reactivating their Brexit plans, with this set to be “a massive focus” over the next six months.
That work will look at accelerating companies’ diversification into the eurozone and ensuring preparedness in terms of funding, innovation and competitiveness.
“Not only have many businesses been impacted by a significant reduction in customer demand from markets across the world due to Covid-19, but they are also facing the largest structural change to trading with the UK in over 50 years,” she said.
“Brexit is now a reality and from January 1, for the first time, Irish exporters to the UK are going to be faced with new changes to customs procedures, regulatory alignment and, undoubtedly, additional costs. Every Irish exporter must now ensure that they take action in terms of securing their supply chains, customer base and meeting new regulatory requirements and ensure they are ready,” Ms Sinnamon said.
Exports to the UK still rose 2% last year, but were overshadowed by a 15% rise to eurozone countries and a 16% increase in exports to North America.
Tánaiste Leo Varadkar reiterated next week’s July stimulus package will go further in helping businesses cope with the Covid fallout. “We know we need to do more as our economy continues to reopen,” he said.