The Brexit negotiations between the EU and the UK are well underway and the evidence so far indicates that progress will be cumbersome and painfully slow, largely down to the ill-prepared British side which cannot reach a consensus of what kind of agreement they want with Brussels. The clock is ticking on the two-year Article 50 timeline.
What this means for Kildare businesses, particularly small and medium sized enterprises, is turbulence and uncertainty. SMEs are the lifeblood of our economy and employ the vast majority of Irish citizens (over 70%). Often operating on small margins, they will be the most vulnerable to the challenges that await us as the UK exits the EU.
County Kildare employs in excess of 63,000 people and the companies employing these people are quite nervous. The only certainty we have with Brexit is the uncertainty.
Although Britain still remains a member of the union for the time being, we have already felt the impact of its decision to leave in June of 2016. Ever since the vote, sterling has fallen by around 10 percent against the euro which is having a serious adverse effect on the competitiveness of Kildare businesses selling into the UK. The difficulty for businesses which are trading with UK based companies is that the nature of any new trading relationship between the UK and the EU (and by extension Ireland) will not become clear for a minimum of three years, and in all probability, for a much longer period than that.
In the meantime, all that Kildare companies can do is brace themselves and prepare for currency volatility, while building into their future plans the possibility of new tariffs, and the potential cost of added customs controls and bureaucracy. The UK still remains determined to leave the customs union and despite the rhetoric from both sides of a ‘’seamless border’’ between the Republic and Northern Ireland, customs controls will be introduced for imports and exports to the UK.
From a trading perspective, the UK will become a third country which means the regulatory framework for trade with countries outside the EU will be applicable in full. While large multinational will likely already have knowledge of this regulatory framework, indigenous Irish SMEs that only trade with the UK will now have to adjust to meet the costly demands of trading with a third country. New administrative costs, completion of commodity codes and ‘rules of origin’ compliance will become the new reality for Irish SMEs, many of which will not have the knowledge, expertise or resources to meet these new challenges.
The UK will formally exit the EU in March 2019 when the two-year Article 50 period finishes and although the British government has now recognised the economic reality that a transition period will be required, they are still obsessed and distracted by internal party matters that rules out any rational thinking. What this spells is further uncertainty and turbulence.
October 18th is the next EU Summit where the long saga of Brexit will no doubt be the main talking point.
County Kildare Chamber are fully engaged in Brexit talks through its relationships with Chambers Ireland, EuroChambers and the International Chamber of Commerce. Allan Shine, CEO of Kildare Chamber is an elected board member of Chambers Ireland and regularly visits Brussels to engage in talks with business groupings on behalf of its 400 members in Kildare.
On the 10th/11th October, Allan Shine will be in Brussels to engage and influence key policy officials and decision makers on how to improve EU competitiveness and increase trade. Brexit will be key to this visit. Allan will be meeting with Irish MEP’s and Chamber’s from across the EU and states that Brexit will be the number 1 discussion point on the agenda for the two day visit.