Irish International Business Network – NY (IIBN) presented on February 28, 2018 at the Bank of Ireland startup lab in New York an encompassing “All-Ireland Brexit Discussion.” Lead by Cork native Susan Hayes Culleton, Managing Director of the Hayes Culleton Group, who gave rapid-fire, up-to-date overview. She was joined by Tony Dunne, US Country Manager at Bank of Ireland and Peter Legge of Grant Thornton, Northern Ireland. As British PM Theresa May moves to extricate the UK from Europe, all the while attempting to maintain the benefits of membership, our IIBN panel comprised of an economist, banker and a tax partner took a holistic look at the impact of Brexit from an All-Ireland perspective. Video
Strengths, Weakness, Opportunities and Threats (SWOT)
Brexit, a situation largely forced onto Ireland, now faces up to the possibility of a myriad of new risks and opportunities. The threats of Brexit for All-Ireland were examined not least of which are a hard border, massively inflated tariffs and even too myopic a view on the issue of Brexit, possibly to the detriment of Ireland’s wider role in Europe. On the brighter side Hayes Culleton commented that “Ireland has the solidarity of the 26 states”, a claim reinforced by comments from Donald Tusk, President of the European Council, who had previously asserted that “the future of the UK’s relationship with Europe…lies in Dublin.” Further positives noted for Ireland were the shared culture and language with the UK as well possessing the UK's only land border with Europe.
Susan Hayes Culleton addressed the weaknesses that Ireland now potentially faces. €1bn of trade crosses the Irish Sea every week, trade which is now under threat but something that she described as “shocking” was the fact that 80% of imports and exports from Ireland must pass through the UK for customs, administrative and tariff purposes. Foreign currency issues have also plagued businesses who now face a weaker sterling paired with an appreciation in the price of Euro-sourced goods.
Known as the #PositiveEconomist, Hays Culleton tipped her hat to The All-Island Civil Dialogue, formed by the Department of Foreign Affairs, brings together various political, economic and social bodies in helping put forward solutions in these uncertain times. Hays Culleton also highlighted Enterprise Ireland, who have launched a Brexit scorecard to help businesses gauge how they will be affected, InterTradeIreland, who have created a 'start-to-prepare' grant and the efforts of Tourism Ireland where the numbers speak for themselves; Ireland has enjoyed a 16% rise in the number of visitors from North America in the last year and a 13% increase in developing markets and Australia. Watch Susan Hayes Culleton's Summation
Bank of Ireland: Agriculture will be greatly affected by Brexit.
Tony Dunne, of the Bank of Ireland gave insights into what he’s currently seeing from his own customer base. “In general, there’s a sense of negativity but also fatigue with Brexit. It’s quietened down. I think some costumers are really getting ahead of it, but there’s a huge amount out there who are putting their head the sand. I think that’s a combination of they’re not experienced enough to make the investment and they also don’t know what that investment entails. It’s very hard to make that investment when you don’t know what’s going to happen.” This lack of action leaves businesses exposed to various black swan events but there are certain businesses that need to act urgently. Tony used the Agricultural industry, “the bread and butter of Ireland,” as an example which could be hit particularly hard from a tariff standpoint. “Historically Irish companies have expanded in Ireland and that the natural thing for them to do was to go across the water and expand in the UK. Now Irish companies are going to have to find different markets.” Watch Tony Dunne's
Grant Thornton, Northern Ireland: Call for more in-depth planning for Brexit.
Peter Legge, a UK tax partner from Grant Thornton, Northern Ireland and fresh off a plane from Belfast, gave insights from his unique position on cross border trade. Citing an internal survey, he noted that “only 9% of businesses with cross border trade have actual plans in place to deal with Brexit.” He puts this down to uncertainty and general fatigue around Brexit headlines. That said, he is seeing some tangible plans put in place especially in financial services; such as those reliant upon such mission critical functions as passporting. All in all, Peter Legge believes a sense of complacency has largely set in amongst SMEs. This dovetails with InterTradeIreland, statistics which point to the fact that 86% of Northern Irish businesses believe Brexit will have a “neutral” impact upon them. On the border issue, Peter Legge stated that people are talking about it: “300 miles, 30,000 people cross the border every day to commute to and from work and €3.5bn of goods transacted across it every year.” To Peter Legge, this is both a political and economic challenge. Watch Peter Legge's Summation
The panel also looked at a possible worst-case scenario if no agreement would be reached by March 29, 2019 when the World Trade Organization tariffs would be enacted. Citing analysis by InterTradeIreland, it was found that Meat & Fish products, the most heavily exported sector from the Republic of Ireland to Northern Ireland, would be subject to a staggering 73.4% tariff under WTO rules. Coming back across the border, Dairy Products moving from Northern Ireland to the Republic of Ireland would also be subject to a 64.1% tariff. This would then be compounded by VAT due on the products, putting significant pressure on working capital requirements.
Opportunities for All-Ireland: Northern Ireland possesses the UK’s only land border with Europe. Ireland is the only English-speaking country in the European Union and with the Corporation Tax NI Act, the region can dictate its own rate of tax, set to move to 12.5% in line with the Republic of Ireland. This rate of tax throughout the North and South offers an “island-wide opportunity” and helps put the country in a unique position as a gateway into Europe and the UK.
Special thanks: to our speakers: Susan Hayes Culleton, Tony Dunne and Peter Legge. IIBN Global Sponsor: Grant Thornton. Bank of Ireland startup lab for their hospitality. This article was prepared by Brett Zych, Jeffries and Mary Ann Pierce, MAP Digital.
About Irish International Business Network:
IIBN facilitates #Connectivity between Irish businesses worldwide with a view to identifying and expanding new business opportunities within the Irish Diaspora. IIBN achieves its objectives by fostering networking among our global members, by collaborating with Government agencies and business organizations, and by mentoring the next generation of Irish and Irish-American entrepreneurs and business leaders. www.iibn.com @NewYorkIIBN, @IIBN @SusanHayes_, #PositiveEconomist @BOIstartups, @talktoBOI, @dunneton , @bankofireland @GrantThorntonNI, @GrantThorntonIE, @peterlegge3, #IrelandandBrexit