Driving through Sophia Antipolis, France’s Silicon Valley on the Riviera, there was a strong welcome for the news Emmanuel Macron had topped the poll in the first round of the presidential elections.
The technology and communications companies, whose many researchers and engineers commuted from picturesque harbour towns like Antibes, are a long way from the old manufacturing Whirlpool factory in Mr Macron’s home town of Amiens in northern France, due to close with the loss of 295 jobs. The challenge for Mr Macron will not come from France’s technological elite, but from discontented and frustrated workers who have lost their jobs in the recession with no prospects of re-employment.
Marine Le Pen, the extreme right party leader, has gained support from the disgruntled unemployed and those who feel threatened by open borders allowing foreigners to flood in. However there is wide support for Mr Macron as the safest pair of hands to manage the Elysee Palace. Consumer confidence reached a nine-year high in March and should play well for him in the final run off French presidential election. It is now widely predicted Mr Macron will win easily.
But his election will undoubtedly complicate Ireland’s efforts to achieve the softest possible Brexit. Mr Macron has previously said there could be no “caveat or waiver” when it comes to defending the EU’s interests. In his election manifesto, he described Britain’s departure as a “crime”.
The currency markets welcomed the Macron success in the first round elections by pushing the euro to its highest point since Donald Trump’s election. This maybe a straw in the wind to long term strengthening of the euro, and will offer little comfort to businesses in Ireland exporting to the UK where the weak sterling has already caused disruption.
However, every cloud has a silver lining. Ireland’s software and hi-tech services companies are likely to gain and continue the ramping-up of sales to the French market which topped €6bn last year, making it ourfourth largest global market. Irish-owned companies such as Novareus, Ecowash, Ding, Vigitrust, Xintech and Gaelectic have been amongst the leaders and should benefit as UK supplies become uncertain. The multinational tech sector that make up the lion’s share of the export sales, will also look to expand further from their Irish base to service the EU. But there is no escaping the enormous exposure of food and drink businesses to a hard Brexit.
Executives from the sector may have reason to seek to cool the Macron zeal in dealing with David Davies, the UK Brexit chief negotiator and seek to get the longest possible transition period before any tariffs are imposed. France is already Ireland’s biggest customer for lamb and seafood and our second largest customer for beef and whiskey. A Macron government is likely to insist on tariffs being imposed on imports from the UK as part of the Brexit process. This double-edged sword will on the one hand damage Ireland’s exports to the UK, but should enable Ireland’s food and whiskey exporters to pick up sales into France where the consumer may be forced to switch from UK suppliers.
However, the exceptional exposure by the sector to the UK won’t be easily over come, as reflected in Ireland’s exports of €4.1bn of food and drink to the market last year, amounting to 40% of Ireland’s total exports of food and drink.
Shifting any significant amount of this into France is unlikely in the short-term, but may be possible over 10 years. The latter being the likely transition period the Irish Government may need to push for, regardless of whom is in the Elysee Palace.
John Whelan is a leading international trade consultant.
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