Irish business "deeply concerned" at May's hard Brexit

Irish business group Ibec has said it is "deeply concerned" at the increasingly hardline position of the British government to Brexit following Theresa May's speech today.

Reacting to May's eagerly anticipated address outlining Britain's plan to leave the EU, the body said moves by Britain to unilaterally forge new global trade deals was at odds with membership of the current EU customs union.

And it warned that a British departure from the customs union could deeply damage UK Irish economic relations.

Ibec's Danny McCoy said: “A return to WTO rules would be a significant economic shock to the economy and would hit Irish exporters hard. It would also set the UK and Ireland on very different economic trajectories.

"In the interest of maintaining good business relations, it is vital that the UK government sets out in more detail how the serious challenges presented by a hard Brexit might be addressed, including the impact on cross border trade on the island of Ireland.

“This is an aggressive move by the UK, showing little regard for our trading relationship and for relations with other EU member states. Theresa May has signalled a change to the UK business model, away from a collective European rules-based approach, towards a more nationalistic, isolated stance.

"This is likely to lead to a protracted and unwelcome period of uncertainty and instability for business. Ireland is uniquely exposed to the risks given out deep economic ties with the UK.

"The recent announcement by the UK government that it may dramatically slash corporation tax and cut regulation to boost its attractiveness to business post-Brexit highlights the competitive threat the UK is likely to pose. Ireland needs to respond to this challenge and ensure we maintain our attractiveness as a place to do business."

The Small Firms Association (SFA) echoed Ibec's concern. SFA director Patricia Callan said: "In today’s speech, Prime Minister May has set out objectives that pose serious threats to small business in Ireland.

"By embracing a hard Brexit, she has signalled very difficult times ahead for those firms that rely on selling to the UK market or are part of a sub supply chain connected to the UK.

"The broader economy will also face substantial challenges as the UK considers changing its economic model, making it even more tax competitive.”

She added: "Today’s speech intensifies the need for action from the Irish Government. The uniquely negative implications for Ireland must be heard at EU level, and exemptions must be made to state aid rules and our common travel area must be maintained.

"Small businesses, especially exporters, are extremely vulnerable to the downsides of Brexit and urgently need the Government to step in to support them. Financial support schemes targeting the exporting sectors should be made available immediately."

The pound dropped below $1.20 against the dollar yesterday amid growing fears of a 'hard' Brexit but bounced back following the speech to trade at $1.2322 by 1pm today. The euro was trading below 87 pence against the pound.

But the FTSE fell by 0.8 per cent in London, hit by the jump in the pound, which weighed on the many companies which earn a significant portion of their revenue overseas.

Meanwhile, the Irish government broadly welcomed Theresa May's Brexit negotiation speech - and said it shares the British Prime Minister's desire to secure a close economic relationship with the EU.

Following the update from May, the government said that its negotiation priorities remained unchanged in terms of protecting Ireland's economic and trading arrangements, peace in the North and border issues, the common travel area and the future of the EU.

In her address May highlighted Britain's historic relationship with Ireland and indicated she wishes to keep the common travel area and avoid a return to a hard border with Northern Ireland.

The statement read: "The alignment between our concerns regarding the economy and trade and the UK objective of the UK to have a close, and friction-free, economic and trading relationship with the EU, including with Ireland is also very important.

"The government notes that the British approach is now firmly that of a country which will have left the EU but which seeks to negotiate a new, close relationship with it.

"While this will inevitably be seen by many as a “hard exit”, the analysis across Government has covered all possible models for the future UK relationship with the EU."

The statement also insisted that the Irish government’s preparation is "extensive" and reassured that organisational changes have been made in government departments and agencies, with additional resources provided in key areas.

It said that an extensive programme of engagement with all other EU governments and EU institutions, including the Commission’s Brexit Negotiations Task Force, was under way.

It added: "The Taoiseach and ministers will continue to meet and engage with their EU counterparts over coming weeks to emphasise Ireland’s concerns and to ensure that they are fully reflected in the EU position once negotiations commence.

"This activity is reinforced by extensive engagement at diplomatic and official level. The government is acutely aware of the potential risks and challenges for the Irish economy and will remain fully engaged on this aspect as the negotiations proceed."

The British Irish Chamber of Commerce said that while it welcomed May's statement, some of its content "raised concern".

DG John McGrane said: "It is clear from this statement that the UK government’s concerns regarding immigration outweigh their need to retain membership of the EU single market and customs union.

"This will be alarming for businesses operating in both the UK and Ireland, many of whom rely on the bilateral trade between our two countries for the over 400,000 jobs they sustain.

“The British Irish Chamber of Commerce stands for the trade between these two islands and the enhancement of this relationship will continue to be our focus."

He added: "Given Ireland’s greater dependence on UK trade than any other EU country, we feel it is only right that the EU understands the importance of this relationship for both islands and accommodates the special trading relationship between us. This includes maintaining the Common Travel Area limiting border control on the island of Ireland.

"Such steps will not only help ensure that Ireland is not adversely affected by a decision that is not of its own making, but will also have broader benefits for the island of Ireland as whole and will help protect the €1.3 billion of weekly bilateral trade that we currently enjoy."

Chief executive of Chambers Ireland Ian Talbot said May's speech was little more than an articulation of Britain's top-line negotiating position.

Talbot said: "Businesses in Ireland are no further advanced in understanding the issues that will need to be dealt with at the conclusion of this process but can take some solace in matters which the UK specified as being key elements in the negotiations.

"The reference to the special relationship with the Republic of Ireland and the importance of retaining the Common Travel Area is welcome, although more clarity on barrier-free arrangements with Northern Ireland remains critical for businesses on both sides of the border.

"The acknowledgement of the desire to take in “elements of the Single Market” and a “new agreement on Customs Union” is positive for Irish exporters but will clearly be very contentious parts of the forthcoming negotiations and mutually beneficial solutions will need to be identified."

He added: "It is vitally important that the Irish Government and all relevant stakeholders ensure that Ireland’s interests are properly represented in the forthcoming negotiations, that the desire for reasonable transition periods forms part of any agreement and that all states negotiate and reach agreement based on economically rational principles."