Institute survey results and third vote delayed

Mar 19, 2019

In a busy period of Brexit commentary amidst events in Westminster, a sentiment survey from the Institute shows that almost half of business leaders in the island of Ireland have little or no plans in place in the event a no-deal Brexit occurs. Read the findings. Separately the Institute says that the temporary tariff regime proposed by the UK for a no-deal Brexit needs more clarity on quality control checks.

Third vote on withdrawal agreement delayed

Just yesterday, the Speaker of the House of Commons used a 415 year old rule to stop a third vote in the House of Commons on the withdrawal agreement on the basis that MPs could not be asked to pass the same deal, after they rejected it twice, unless it was “different in terms of substance”.

Speculation is now rife that Theresa May will go to Thursday’s Brussels summit with a request for a long extension to Article 50. Government sources suggest that the Prime Minister may seek to negotiate a lengthy extension with the EU which contains a “get-out clause” enabling the extension to be cut short if the Withdrawal Agreement is passed by Parliament before the European parliamentary elections in May 2019.

More clarification needed on quality control checks in the event of a no-deal

While the UK government’s temporary proposals for a no-deal Brexit comprehensively cover tariffs, little is said about regulation or quality assurance checks on goods going into the UK.  In a press release issued last week, Director of Public Policy and Taxation at Chartered Accountants Ireland, Brian Keegan said:  “More clarification is needed about how, for example, foodstuffs are going to be regulated for quality control purposes. The tariff regime announced doesn’t deal with the question of how the UK will manage the regulation and quality control of food coming into the UK market.”

On the proposals for Northern Ireland, Mr Keegan said: “The open border between Northern Ireland and the Republic of Ireland is very welcome from a supply chain perspective. However, though the proposals suggest no tariffs and very limited checks on trade from Ireland into Northern Ireland, the Republic of Ireland, as part of the EU, will have to fulfil its obligations under the Union Customs Code. This could involve quality assurance checks and even tariffs on goods going into the Republic of Ireland from Northern Ireland under this scenario. This will potentially put traders in Northern Ireland at a competitive disadvantage to traders in the Republic of Ireland and give rise to a confusing arrangement for cross-border exporters particularly those with integrated cross-border supply chains.”

Many of the products that Ireland exports to Great Britain would become more expensive under temporary tariff proposals. Metals, chemicals, textiles, footwear and machinery are all included in the schedules.

“While the tariffs proposed by the UK in the event of no-deal will apply across the board to all imports into the UK, they are likely to hit Irish exporters the hardest because many of them start from a higher cost-base than suppliers coming from locations such as South America. Tariffs on agri-food under the proposals could be up to 60 percent of the EU’s Most Favoured Nation rate. These additional costs will severely impact Irish exporters who could see their competitiveness severely impacted. ” said Mr Keegan.

Cróna Clohisey spoke about the impact of the UK’s proposed tariff regime on Newstalk’s Breakfast Business with Vincent Wall last Thursday morning, 14 March (listen at 13:35).

Almost half of Irish businesses without a plan for ‘No Deal’ Brexit scenario

A new Brexit sentiment survey from Chartered Accountants Ireland published last week shows that almost half of business leaders in the Republic of Ireland have little or no plans in place for a no deal Brexit.

Despite 60% of Chartered Accountants in the Republic of Ireland saying that Brexit will have a negative impact, only 17% of those respondents said their businesses are fully ready to meet the challenges that Brexit might bring.  Reflecting the current uncertainty, almost half of businesses surveyed have made little or no plans to prepare for Brexit. 

Among the key findings from the  survey of Chartered Accountants across all sectors in the Republic of Ireland were: -

  • 69% said that the UK and EU were unlikely to reach a deal by 29 March 2019
  • 44% had little or no plans for a no deal Brexit, 39% had some plans
  • 60% said that Brexit would have a negative impact on their business, 12% said Brexit would have a positive effect
  • 60% said the local business voice was not being heard in the Brexit negotiations
  • Supply chain disruption was the biggest concern, followed by customs administration and then customs duties

The survey was also carried out among members of Chartered Accountants Ireland in Northern Ireland and the results are almost identical.

Speaking about the study, Brian Keegan, Director of Public Policy and Taxation at Chartered Accountants Ireland, said:

“These findings reaffirm that some level of certainty is urgently needed among the business community both north and south of the border.  Without assurances of the future trading landscape, businesses are finding it difficult to put concrete plans in place to prepare for Brexit and many have adopted a wait and see approach.”

According to the survey, Chartered Accountants rated supply chain disruption as their biggest concern followed by customs administration and thirdly customs duties.

“The businesses we have engaged with and spoken to over the last two years have largely been more concerned about supply chain disruption and customs paperwork than the costs of any potential customs duties.  Many dealing with consumer foodstuffs with a short shelf life, for example, are unclear about how customs checks will take place and say that any delays in clearing customs could be detrimental to their businesses.” said Mr Keegan.

The survey also showed that almost 70% of Chartered Accountants in the Republic of Ireland do not believe a Brexit agreement will be reached by 29 March.

“It is hard to believe that with less than three weeks to go until 29 March, the UK and EU are still without an agreement. No agreement will result in a hard border on the island of Ireland and this will mean potentially hazardous trading conditions for businesses both north and south of the border. Chartered Accountants Ireland has been urging businesses to examine their supply chains, look at their cash flow and update their knowledge on customs in order to be ready to cope with the prospect of a no deal Brexit.”

1,320 Chartered Accountants responded to the survey which was carried out on 26 February 2019. 821 respondents were based in the Republic of Ireland.  Thank you to all respondents for taking the time to answer the survey.  The results of the survey were reported in the Sunday Business Post and Business World.