- Brexit set to impact business in Ireland and the UK
- Free Trade Agreement post-Brexit is probable
- Potential impact on Northern Ireland is of concern
Business leaders in the Republic of Ireland and in the United Kingdom believe that Britain’s departure from the EU will negatively impact their business, according to a research report published today by the Institute of Directors in Ireland (IoD). The report, “Brexit: The Potential Implications”, which includes findings from a joint survey of IoD Ireland and IoD UK members, shows that 92% of IoD Ireland respondents disagree with Brexit.
Key findings include;
- Ireland is more dependent on trade with the UK than the UK is with Ireland, with 75% of Irish respondents having business links with the UK while just 29% of UK respondents have business links with the Republic.
- 92% of IoD Ireland respondents disagree with Britain’s decision to leave the EU, and 70% believe the effects of Brexit on Ireland will be negative. Similarly, 83% think that Brexit will ultimately be negative for the UK.
- While the UK is a strong source of business links and revenue and, although Ireland is significant to IoD UK respondents in representing a strong customer base, the EU is more important to them in terms of suppliers. 81% of IoD UK members have suppliers in the EU, compared with around half of IoD Ireland members.
- Most respondents from IoD Ireland and IoD UK want to see a renewal of the Common Travel Area for Irish and UK citizens which includes EU citizens who are resident in Ireland / the UK.
- Brexit will more than likely take place at some time during 2019, with almost half of IoD Ireland respondents (47%) saying it will transpire either by March 2019 or later in 2019. Just over 20% think Brexit will take place in 2020 or 2021.
- 49% of IoD UK respondents think the effect of Brexit on investment in Northern Ireland will be “very” or “somewhat negative”.
“Unsurprisingly, Brexit is of huge concern to business leaders in Ireland and the UK,” commented Maura Quinn, Chief Executive of the Institute of Directors in Ireland (IoD). “There is a lot of uncertainty, firstly around its timing and secondly around its effects. The response from our members and those of our counterparts in the UK show quite definitively that business leaders on both sides of the Irish Sea are uncertain as to what will happen next.”
Few positives for Ireland, but even fewer for the UK…
There is widespread consensus among IoD Ireland members that Brexit holds nothing positive for Ireland in general terms and that it will negatively impact the Irish economy. In terms of trade, Ireland is more dependent on the UK than the UK is on Ireland. The majority of IoD Ireland’s respondents (75%) have business links with the UK. Conversely, almost the same number of UK businesses (71%) do not have a business relationship with businesses in the Republic.
Most IoD Ireland and IoD UK respondents have not changed their revenue growth forecasts for 2016 or 2017, although a significant number (29% and 19% respectively) have reduced their forecasts slightly for 2017. In terms of the economic impact of Brexit, 62% of IoD UK respondents say there will be a significant or a slight drop in growth for Britain’s economy in 2017. 58% of IoD Ireland’s respondents say that there will be a significant or slight drop in Ireland’s economy in 2017 as a result of Brexit.
It will also damage political relations between Ireland and the UK. Political relationships between the UK and Europe are also in jeopardy however, according to almost all IoD Ireland respondents (93%), although Irish political relationships with Europe will probably not change.
…although a Free Trade Agreement post-Brexit is probable…
Most respondents from both IoD Ireland and IoD UK (64% and 55% respectively) want to see a renewal of the Common Travel Area for Irish and UK citizens which includes EU citizens who are resident in Ireland / the UK. 74% of IoD Ireland respondents say the best outcome for their organisations post-Brexit would be that the UK stays in the EU, compared to just 39% of IoD UK respondents who say the same.
Both IoD Ireland and IoD UK members maintain that their business links between the EU and their respective countries are significant. While about half of IoD Ireland members have suppliers in the EU, 81% of IoD UK members have EU suppliers. The fact that such a high level of suppliers are based in the EU does not bode well for UK companies as there is a risk that deals with European suppliers could be affected if Britain fails to secure tariff-free transactions with the EU post-Brexit.
…Brexit will have implications for exchange rates, regulations and EU relations…
73% of IoD UK respondents believe Brexit will have a very negative or negative impact on exchange rate volatility. 64% believe Brexit will have a very negative or negative impact on the UK’s future relationship with the EU and almost half (47%) believe it will have a very negative or negative impact on increasing regulatory burdens.
…and could pose risks for the Ireland / UK / EU trade balance…
75% of IoD Ireland respondents have business links with the UK, but almost the same percentage of IoD UK respondents have none with the Republic. At the same time, more of IoD UK members’ B2B and B2C customers are based in the Republic than are based in the EU. Apart from domestic suppliers (76%), most of IoD Ireland’s business suppliers are based in the UK (63%).
UK-to-Ireland trade runs at lower levels than Ireland-to-UK trade, and more trade occurs between the UK and the EU than between the UK and Ireland. More Irish businesses earn revenue from the UK than the UK from Ireland. IoD Ireland respondents note that the UK is a strong source of business links and revenue and, although Ireland is significant to IoD UK respondents in terms of a strong customer base, the EU is more important to them in terms of supply and trade.
…and the impact on Northern Ireland is of concern…
Trade between Northern Ireland and the Republic is significant and the Republic continues to dominate Northern Ireland’s export market. 22% of IoD UK respondents think the effect of Brexit on investment in Northern Ireland will be “very negative”. 27% think the effect will be “somewhat negative”.
Although the proportion of members affected by Brexit is relatively small, it is a big concern for those who are affected with the prospect of passport control and employment permits being areas of concern.
Both IoD Ireland and IoD UK respondents (22% and 8% respectively) have employees who live in the Republic but who work in Northern Ireland, or vice versa. Cross-border workers are important to both IoD Ireland and IoD UK respondents. One in ten IoD UK members in Northern Ireland employs non-UK staff from the rest of the EU (excluding ROI) and 32% of IoD UK members in Northern Ireland think that Brexit will have a “very negative” or “somewhat negative” effect on their cross-border workers.
About the survey