IRISH premier Leo Varadkar has drawn criticism for his recent comments about Brexit.
He was accused of “disrespecting” the will of British voters by suggesting that a “hard” Brexit – leaving the EU and single market entirely – could not be negotiated within the current timescale.
But it’s unsurprising that Brexit and “solutions that might work for all of us” were foremost in the taoiseach’s mind during his first official visit to Belfast.
Based on current exchange rates, about £1bn in trade crosses the Irish Sea every week, according to the British-Irish Chamber. And many companies in Ireland are already reeling from the impact of a vote they had no involvement in.
“After Sterling fell to the floor [in the wake of the Brexit vote], it created a very immediate issue for Irish exporters who saw profits wiped out by currency fluctuations,” says Enda Newton, who chairs the Irish chapter of the British Irish Trading Alliance (BITA).
“They didn’t have hedging strategies and it really hurt SME exporters. It’s very challenging on a number of fronts and we are trying to get our heads around all of this but it’s difficult because we don’t really know what’s going to happen.”
BITA was formed by Kent-based Irishman Paul Whitnell in 2012, with the aim of developing a network of skilled professionals across both countries to help businesses recover from the after-effects of the 2008 banking crisis. Its success prompted the creation of an Irish chapter 18 months ago.
At a social event in Dublin, Newton stresses the importance of the two nations to each other’s economies.
“The UK is by far Ireland’s biggest trading partner. But for a few benefits we will inevitably get from financial services and a few other sectors, Brexit is overwhelmingly negative for Ireland.”
For companies in agriculture, where 37% of Ireland’s agri-food and drink exports were UK-bound last year, the effects could be “calamitous,” says Newton. “A few firms will do well but that’s hard to explain to a dairy farmer in Kilkenny whose sole focus is exporting to the UK.
“All we can do is manage the things we can control.”
In March, the Irish government’s business support agency Enterprise Ireland launched an interactive platform to help SMEs prepare for Brexit, offering a “scorecard” in response to an online questionnaire.
But what of the British companies involved? Whether a yoghurt producer will source differently post-Brexit, or continue to import milk from existing Irish suppliers remains to be seen.
And, as Fearghal Power points out, it isn’t a one-way relationship.
“A lot of [Irish businesses] I know are importing components from the UK as part of their supply chain, so they are holding their competitive advantage,” he says.
Power is head of business development for Assure Hedge, which protects the profits of around 750 SMEs on both sides of the Irish Sea against currency fluctuations by guaranteeing exchange rates.
“Their biggest concern with Brexit is the volatility in Forex over the next 24 months,” he says.
Rita McCabe, who distributes health and wellbeing products in Ireland for Warwickshire-based Forever Living, agrees. “Currency fluctuations could cause huge problems for some Irish companies. I don’t know that they will be drastic for us as a company. It’s just a case of wait and see,” she says.
Plenty in Ireland sense opportunities too.
The Irish Times recently quoted Irish authorities saying they had struck deals for more than a dozen London-based banks and finance houses to move some of their operations to Dublin in preparation for Brexit.
The construction industry has responded, and Dublin’s skyline is currently dominated by cranes.
“There’s aggressive expansion of the construction industry in Dublin in anticipation of people relocating ahead of Brexit,” says Scott Somers of engineering company EDC. “You can see the potential there and so we are looking at the short-term potential benefit.
“But we don’t know what will happen. Will Britain pull the plug on Brexit and so companies don’t come here – or will they only move a small presence here – and then you’re left with the situation we had in ’08 when the property bubble burst?”
Cormac Molloy, a senior recruitment consultant at Building Staff Solutions in Dublin, shares some of his scepticism.
“Citibank and Bank of America say they will move business here but the infrastructure isn’t here for them,” he argues.
“There’s no housing, we need improvements to the Luas (Dublin’s light rail system), roads, everything. There are plenty of office blocks but get in 700 to 1,000 employees and where are they going to live?”
But Fabrizio Martelli, who develops and manages strategies to minimise companies’ utilities costs, says it’s not just banks who are sizing up Dublin’s office space. British companies who trade with Europe are exploring whether establishing a base in Ireland could help them avoid customs tariffs or VAT-related costs.
“I have been getting a lot of calls from existing SMEs in the UK about how to start up a company in Ireland. They don’t act on the information but they are getting intelligence because they want to be ready to transfer if required.”
NEXT WEEK: Views from British-Irish traders based in the UK.