Brexit issues

Oct 10, 2017

Brexit was a theme which trickled into many aspects of the Budget speech.  Minister Donohue was very clear in stating that Brexit will likely result in permanent changes in trading activities and patterns for Irish businesses.  Chartered Accountants Ireland had called for a change to VAT import rules to deal with the upfront VAT costs that traders will face on imports from the UK under the current system which will cause cash flow problems when the UK leaves the EU and are disappointed not to see this mentioned.

The Minister did acknowledge that SMEs would need to look beyond the UK into other markets for trading purposes and would need support to do so.  To aid this, the Government announced a Brexit Loan Scheme which will see €300 million being made available at competitive rates to these businesses to bolster short term working capital needs. The Minister was keen to highlight that this scheme will be available to food businesses given their unique exposure to the UK market

Minister Donohue also highlighted the particular exposure that will be experienced by the agri-food sector and said the loan scheme, which is supported by the European Investment Bank Group, the European Commission and the Strategic Banking Corporation of Ireland, would enable businesses to plan for Brexit and “grow into the future”. 

In terms of further Brexit-proofing the economy, the commitment to the Rainy Day Fund which was announced in last year’s Budget was renewed and an additional allocation of capital expenditure of €4.3 billion over the next four years was announced.

Additional funding is also being plugged into the Department of Agriculture, Food and the Marine for 2018 and further Brexit response measures will be announced.   These actions, along with the retention of the 9 percent VAT rate for tourism are all seen as positive policies in terms of protecting the economy from the risks of Brexit.

In addition, the Minister said that Ireland needs to be able to proactively respond to the challenges and opportunities that will arise from Brexit. To enable this, 40 staff will be recruited to the Department of Business, Enterprise and Innovation and other agencies next year.