The Brexit Dilemma
The recent Ibec CEO Conference featured an impassioned speech from Alastair Campbell about the importance of Ireland in the discussions in the lead up to the Brexit Referendum. Niall Swan reports.
June 23rd marks one of the most important days in the history of the European Union. The day after Ireland plays Italy in what will hopefully be a fortuitous Euro 2016 encounter, the British public will vote in a referendum on whether the United Kingdom should stay in or leave the EU. Given that no country has left the EU before, there is plenty of speculation about what will happen, but no clear facts.
Some may think that a potential ‘Brexit’ has nothing to do with Ireland but they’d be wrong. The possible ramifications of the UK leaving the European Union are far-reaching. Which is why, at the recent Ibec CEO Conference at the RDS in Dublin, the business group made it absolutely clear that Irish businesses must get involved in the discussion and convince their British counterparts to vote to stay in the Union.
At the conference, Ibec handed out a booklet entitled The Impact Of A Possible Brexit On Irish Business in which the confederation outlined the numerous ways in which a vote to leave would negatively affect Ireland. Former British government spokesperson Alastair Campbell spoke passionately at the conference about the need for Irish businesses to play their part in influencing British voters to stay in the European Union. He called upon those present to engage with the 660,000 Irish-born citizens in the UK who are eligible to vote in the upcoming referendum and explain to them the importance of a vote to stay. "It is with their help that this will be defeated, and it is up to you to make that phone call and convince somebody, not just for their sake, but for yours as well," he said.
“The real battle is going to be fought in millions of British homes and workplaces as people turn to friends and family and people we trust and respect, work with and for. And that includes people who do not have a vote, like you. Please do it. My country needs you.”
As one of Ireland’s most important trading partners along with the EU and USA, the UK plays a significant role in Irish business. The possibility that freedom of movement for people between Ireland and the UK could be restricted could be critical.
Ireland’s trade of goods and services with the UK totals over €60 billion per year according to the Department of Foreign Affairs. €4 billion of this comes from the Irish Food & Drink sector alone, highlighting the importance of this referendum to the FMCG industry in Ireland. Conversely, Ireland is the UK’s fifth largest export market, importing goods worth over €17.5 billion including €3 billion worth of food and drink.
Ireland exports 55% of its meat and 30% of its dairy products to the UK on a yearly basis, valued at €2 billion and €1 billion respectively. Not only that, but 70% of Irish exports of ingredients and prepared consumer foods are to the UK also. A vote to leave the EU would possibly result in increased transaction and compliance costs for businesses in Ireland.
The exchange rate between the Pound Sterling and the Euro is key for Irish companies in the traded sector. Since the announcement of the date of the referendum the value of sterling has depreciated from £0.7 in December 2015 to £0.8 in March. If the UK was to leave the EU, it is believed that the value of the Sterling may drop another 10/15%. The high level of uncertainty can make it difficult for businesses to plan and invest while any further weakening of the Sterling could also have an impact on particular sectors in the Irish economy that trade with the UK
Aside from the possible impact on trade between Ireland and the UK, there is a fear among retailers that Brexit will undo all the hard work that has been done recently to improve consumer confidence in Ireland. This is a sentiment shared by CEO of Musgrave, Chris Martin. Speaking to Checkout recently, he said; “I actually look at Ireland at the moment and see a confidence and ambition as we talked about at the Ibec conference. I think there will clearly be ramifications for Ireland. From a retail point of view, I think the real issue is going to be about what it knocks in terms of consumer confidence. We know as retailers, that confidence is important for the consumer
“There's also the issue around what will be the financial market's reaction the day after a vote to leave. We've kind of been there before, because when we had the recession start in 2008 the exchange rate went up to just under 95p, we had to deal with cross-border trade with Northern Ireland. So we've been dusting off and looking at that.
Martin is also concerned that the move may undo some of the positive momentum that the Irish market has seen in the past 12 to 18 months. “My main concern though would be that it knocks the momentum and has an impact when things are going so well for us. It's about planning and being involved but also not allowing over-planning. I think that's where we need some political leadership.”
© 2016 - Checkout Magazine by Niall Swan