Offaly businesses increasingly worried as Brexit looms
Businesses in Offaly are becoming increasingly negative in their outlook as the UK’s departure date from the European Union edges closer and the likelihood of a hard Brexit looms large, experts warn.
Certain businesses in the region are turning to stockpiling as a Brexit-proofing strategy, while others are diversifying the markets they export to.
Richard Dunne, AIB’s Brexit Advisor for Offaly said: “Given the increasing likelihood of a hard Brexit, the feeling among businesses in the Offaly region is increasingly negative as businesses face the realisation that there will be an additional negative cost impact on elements of their trade that exists with the UK, sterling or indirectly through their own customer bases exposure to the UK."
"As a result, we in AIB are seeing an increase in the number of customers implementing a Brexit plan with enquiries being received on the SBCI Brexit Loan scheme as a way of offsetting the immediate impact of Brexit on their business," Richard added.
Mr Dunne said local businesses in the manufacturing space are turning to stockpiling to off-set Brexit risks – a strategy that is not an option for those in the food sector, who are instead turning to market diversification.
“We have been advised by our customers in the manufacturing industry that stockpiling is a prominent strategy, whereby production is being ramped up presently and being shipped to the UK so that there is both availability of stock to meet customers’ requirements post Brexit. While stockpiling is an option for long life products, the food sector in the Offaly region do not have this luxury."
"For those businesses, diversification to alternate European markets with product adjustments requirements is a primary focus. Our food sector customers have also demonstrated that they are proactively engaging with their current UK customer’s base to reiterate their product’s unique selling point, as well as addressing the issues that a hard Brexit may enforce on how the cost impact will be managed on a joint basis,” Mr Dunne said.
"To assist Offaly-based SMEs navigate these uncertain times, this month we will launch the AIB Brexit Ready Check, a simple online tool for SMEs to check on their mobile in less than five minutes how Brexit might impact their business. AIB has also launched a free export credit check in collaboration with Euler Hermes and has put a €122m SBCI Brexit loan fund in place to support shorter term investment and working capital," Richard explained.
The AIB Brexit Sentiment Index for Q3 2018 reveals 63% of Republic of Ireland (ROI) SMEs believed Brexit would have a negative impact on their business, up from 58% in Q2 2018. Some 74% of SMEs in RoI believed it would have a wider negative economic impact. Meanwhile 44% of RoI SMEs say Brexit is resulting in a negative outlook for their sector, and only 5% of ROI SMEs have a formal plan in place, with 3% in Northern Ireland having a plan.
The Brexit Sentiment Index baseline is zero, with a potential range from +100 to -100. For Q3 2018, the Index registered a score of -41 in the ROI, from -37 in Q2, and -35 in Northern Ireland for Q3 2018 from -37 in Q2 2018. This means RoI has become slightly more negative in outlook when it comes to the impact Brexit may have on their business than in Q2 2018. The Index shows SMEs operating in retail (-40), manufacturing (-43) and tourism (-49) are the most pessimistic in terms of sentiment.
AIB’s Brexit Sentiment Index conducted by Ipsos MRBI is a quarterly survey of more than 700 SMEs in the Republic of Ireland and Northern Ireland that assesses the attitudes of SME business leaders on Brexit and the impact on their businesses.
AIB’s quarterly Brexit Index helps inform AIB about the needs and solutions required by customers as plans for Brexit progress.