Statement in the Dáil on the UK EU Referendum Result

June 27th, 2016 - Pat Breen

Click on this link to listen to my contribution dail-statements-on-brexit

I welcome the opportunity to speak in this debate as I want to remind the Deputies of the strengths of Irish enterprise, of our strong national competitiveness, and of the ability of the enterprise sector to respond with confidence to the sort of challenges which the UK referendum result throws up.

I want to give Members some detail about the work that has been ongoing in my Department and agencies in preparation for the “Leave” outcome, and I want to give them an insight as to the actions we are now taking. As Minister of State with responsibility for employment and small business, my focus is on the small and medium enterprises which account for 99.7% of active enterprises, and employ almost 70% of people in the private sector. While there is more uncertainty for small and medium enterprises, I believe we have some of the most innovative small and medium enterprises in Europe which can adapt to change and which, I believe, will thrive.

First, I would reiterate that while we have seen the market in some turmoil, in terms of movement in currencies and share values, it is important that we are able to separate these short-term impacts from the longer-term issues.

What we need now is calm in our reaction. We need to be measured in how we respond so as to provide genuine reassurance to business and employees and we should avoid anything that amplifies the uncertainty. Things are uncertain and we know it will take up to two years for the UK to negotiate its exit and some years to negotiate its new relationship with the Union. We have to accept this situation as the new norm.
Members will be aware that the Cabinet met last Friday morning to review contingency plans. Directly following that meeting, the Minister for Jobs, Enterprise and Innovation, Deputy Mitchell O’Connor, convened a meeting of the CEOs and officials of IDA Ireland and Enterprise Ireland to oversee the management of our response and the messaging to business overseas and domestically. The agencies have been asked to communicate directly with their clients and I know that in addition to writing to them there have been multiple contacts by senior business clients with IDA Ireland and Enterprise Ireland. In fact, Enterprise lreland has set up a call line to provide assistance.

We must convey our genuine confidence in our ability to continue to compete and win international investment. We have every reason to believe that we can continue to grow exports and market share. The Minister, Deputy Mitchell O’Connor, will continue to meet with the enterprise agencies to lead the co-ordination of our response to challenges as they emerge.

It is clear that currency movements present a significant challenge for exporters. We know, for example, that people in the food, construction and retail sectors will be most affected. Obviously, this is not a new challenge. We have lived with the current volatility for years. Many companies have been hedging strategies to cope with currency changes and many have sourced strategies. What is not clear is the ultimate extent or duration of the current currency swings. However, my Department has been working to develop a pilot scheme to improve access to working capital for exporters with the Strategic Banking Corporation of Ireland, Enterprise Ireland and the Department of Finance and I hope that this will be deployed as soon as possible. The agencies have been asked to keep the issue of currency volatility under review and Government remains open to consider any effective proposals they might make.

We know we have a serious market exposure to the UK. However, because of our determined efforts to assist companies to diversify into new markets, El clients have moved in recent years from 45% of goods and services exports going to the UK to 37% in 2015. Enterprise Ireland has been asked to accelerate the finalisation of its plans for increasing the number of trade missions both within the EU, to include France, Germany and Scandinavia, and to intensify our programme of missions in non-EU markets. A review of the overseas footprint of Enterprise Ireland and IDA is also being initiated to ensure we are fully prepared to support business in finding new markets and investment. In tandem, the Minister for Jobs, Enterprise and Innovation will lead a trade mission to the UK with aviation companies in early July.

I believe our SMEs are innovators. I will outline one example of one area in which our SMEs are EU leaders. The EU Digital Economy and Society Index for 2016 found that Ireland’s SMEs are the number one seller online in the EU. Our SMEs also lead the way for selling online cross-border, with 16% of SMEs doing so - well above the EU average of 7.5%. On the position regarding overseas investment into Ireland, IDA Ireland has engaged in extensive planning for the referendum result. It is providing assurance to overseas clients as to Ireland’s continued commitment to EU membership; the soundness of the economy and consistency of our fiscal strategy, including on corporation tax. It is not possible to quantify any possible flight of investment from the UK or to what extent new investment in the EU will be directed to Ireland. It is just too early to say, but we are well placed to attract such investment. Apart from our other attractions, the continued political uncertainty in the UK in the short to medium term, coupled with the underlying uncertainty as to its new relationship with the EU, will weigh heavily on the minds of investors.

I would like to reassure Deputies that the Government, my Department and the enterprise agencies are fully committed to supporting business in this period of heightened uncertainty, but we do so against the background of a strong economy and a highly competitive enterprise sector.