Brexit: Three Challenges for Irish Companies
With only a few months to go before the UK leaves the EU, Irish companies should be prepared for Brexit.
Trade relations between the UK and Ireland are very strong; from energy to transport to finance. Can those relations withstand Brexit, or will Irish business have to find other markets? How are businesses, large and small, preparing for Brexit? There are many challenges Irish companies will face. Here are three we can focus on now.
1. Exchange rate.
The most immediate impact from Brexit will be the value of the British pound. The value of sterling dropped right after the Brexit poll result and its value might continue to be volatile after Brexit. This is already affecting Irish businesses. Imports have become cheaper, which is good news for businesses buying products from the UK, but exports are becoming more expensive, so for businesses selling to UK customers this is a challenge. Moreover, Brexit is likely to make business with our nearest neighbour more complex with new customs laws implemented. Some sectors will be affected more than others (for instance FMCG, energy, gas, retail, tourism, fishers and aviation), as well as some types of company like small and medium enterprises (SMEs) exporting to the UK. It is very important to anticipate these challenges and review business models accordingly.
2. Northern Ireland.
Brexit might create a need for checks on the border between Northern Ireland and the Republic of Ireland. This situation will jeopardise the Good Friday Agreement and will bring instability to the region. A hard border will create delays and costs linked to customs processes. According to OECD, trade costs could increase by up to 10% of the value of goods exchanged between the two countries. The negotiations on keeping Northern Ireland in the European customs union and the single market are still underway.
3. Trade relations with Britain.
The UK is Ireland’s main trading partner with 14% of total Irish goods and services exported to the country. Brexit has resulted in British-made goods being promoted heavily by the UK government to the detriment of Irish companies’ goods and services. If your business is reliant on this country then you have to prepare for Brexit, by diversifying your trade country partners and looking for other markets. Additionally, Brexit could mean more competition from other international markets.
With only a few months to go before the UK leaves the EU, Irish companies should be prepared for the kind of disruption that Brexit will bring. Only a few Irish companies are really prepared for Brexit. Now is your time to take action by attending Brexit events and meeting experts in the field.
You might also be interested by the Brexit Series by Business & Finance https://businessandfinance.com/category/brexit-series/