As the hard Brexit looms larger, the biggest challenge will come from the disruption in customs and logistics.
It would be an understatement to say that on both fronts we are not prepared. Customs authorities will have to handle an estimated 80% increase in the documentation on imports and exports on goods.
This will arise from exporters transiting the UK to get to mainland Europe, as well as exports to and imports from the UK, as a non-EU country.
It’s further complicated by the vast range of goods from international markets entering the UK as the first point of entry into the EU, before they are shipping to Ireland.
Inside the EU, the UK has done the necessary paperwork for Ireland before shipping the goods, but this will not be the case after Brexit.
The big worry is there is no evidence of any recruitment programme or additional computer spend by the Irish Customs.
Brexit could wreak havoc on businesses across the country who move billions of goods through our sea and airports.
The inadequate freight infrastructure is equally of concern. Ireland has been falling behind most of our European neighbours in terms of infrastructure investment.
The World Bank’s Global Logistics performance report for 2016 showed Ireland was ranked 18th, way behind Germany in first place and the UK in 8th position.
On efficiency of the export-import clearance process by border control agencies, which includes customs, Ireland is ranked in 25th place.
On its quality of trade and transport infrastructure such as ports, railroads, roads and information technology, Ireland is ranked 22nd.
Ireland’s overall infrastructure quality rating as benchmarked by the World Economic Forum has also fallen over the five years to 2015. Ireland’s rating is now below the OECD average.
The CSO throws further light of the looming infrastructure challenges in figures which show the huge increase in truck, sea and airport freight volumes over the past five years.
The nub of the problem according to the National Competitiveness Council in their latest review is under-investment in infrastructure because “the current planned capital expenditure by Government in the period to 2022 will not be sufficient to maintain the existing land transport network”.
In common with most other OECD countries, general Government capital expenditure in Ireland declined significantly as a result of the crisis. It remains relatively weak.
Following a peak investment of 5.2% of GDP in 2008, public investment fell to a low of 1.8% of GDP in 2013. The 2015 Capital Plan ‘Building on Recovery: Infrastructure and Capital Investment 2016-2021’, which committed the exchequer to a spend of €27bn on capital projects has yet to make any real progress.
We are faced with real and persistent under-investment in infrastructure in Ireland which is already affecting our supply chain efficiency and reliability. This is even before Brexit kicks in.
An urgent increase in capital expenditure by the Government is now required to improve our roadways particularly the access routes to seaports and airports, including the N20 Limerick-Cork upgrade, N21 Limerick-Tralee upgrade, and sections of the N25 Cork-Waterford road and completing the Galway City outer bypass.
The time delays in implementing infrastructure projects will likely see Brexit in full flow well before their execution.
The efficiency and effectiveness of Ireland’s infrastructure and customs networks have a strong bearing on the competitiveness of indigenous firms.
More than ever, with Brexit getting ever closer, immediate and comprehensive Government actions are needed to support businesses getting goods on and off the island.
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