15% of Irish CEOs expect to see a hard Brexit at the end of March 2019.
A large majority of Irish CEOs (81%) believe that Brexit will bring more challenges than opportunities while 76% are of the view that the UK will leave the EU at the end of March 2019 with nearly 15% believing it will be a hard Brexit. Meanwhile, 70% believe that Ireland can do more to develop a national strategy to better promote Ireland’s attractiveness as a location of choice for investment post-Brexit and nearly one in three expect their level of trade with the UK to decline post-Brexit. These are some of the key findings revealed in PwC’s latest CEO Brexit Survey.
According to Feargal O’Rourke, Managing Partner at PwC Ireland, “Brexit negotiations have started but there is a long road ahead and given the prevailing uncertainty, businesses need to plan for the worst. The facts remain that with the complexities of what need to be negotiated, any trade negotiations will likely take longer than two years to complete.
“There is no doubt that a hard Brexit with no exit agreement or free-trade/transition arrangement by end-March 2019 would be uncharted waters for Irish businesses with a very different business landscape emerging. Ireland has done well to have its priorities included in the EU Brexit negotiating priorities agreed at the European Council EU27 meeting in Brussels at the end of April. It must be borne in mind, however, that Ireland will be only one of the EU27 bloc in any final ratifications,” he added.
More challenges than opportunities
According to the survey, business confidence in the outlook for the next three years has fallen. 61% of Irish CEOs are confident about their organisation’s prospects for revenue growth over the next three years, down from 85% prior to the UK’s decision to leave the EU in June 2016. In addition, 30% say that they expect a decline in their level of trade with the UK post-Brexit. An overwhelming majority of 87% are concerned about the flow of goods to and from the Republic.
John O’Loughlin, Global Trade & Customs Leader at PwC Ireland, said: “Customs and tariffs are a key concern for Irish business leaders. If World Trade Organisation rules govern EU-UK trade relations post-March 2019, competitiveness and costs would likely be impacted as companies compete on a new global playing field. For example, tariffs as high as 55% for imports into the UK of cheddar cheese may apply and would have serious implications for the Irish agri-food sector. Additionally, non-tariff barriers such as customs compliance will drive incremental costs and potential border delays with contracts also needing to be reviewed in the context of who would bear duty at point of entry.
He added: “For importers into Ireland, companies also need to consider the tariff impact on the purchase of raw materials, ingredients and finished goods with costs also expected to rise. For companies who import and subsequently export, there are opportunities to mitigate the Brexit impact through the use of existing customs reliefs, for example inward processing relief.”
Other concerns cited in the survey include: our future economic growth (85%); potential introduction of tariffs (82%); our overall competitiveness (81%); the negotiation of a new trading agreement between the Ireland and the UK (81%) and exchange rate volatility (75%).
Source: PwC.