Irish Exporters Association cautiously welcomes Budget 2019, but warns more action needed to prepare the country for a potential no-deal Brexit
Dublin, 09th October, 2018: The Irish Exporters Association, the voice of the Irish exporting industry, cautiously welcomes today’s Budget 2019 delivered by Minister for Finance, Public Expenditure and Reform, Paschal Donohoe.
Commenting on today’s announcement, Simon McKeever, Chief Executive of the Irish Exporters Association, stated: “The Irish Exporters Association welcomes the attention given to Brexit preparedness measures and future proofing the Irish economy by investing in education and SMEs.
In light of the continued uncertainties caused by Brexit, we welcome Minister Donohue’s announcement for a €300 million Human Capital Initiative, a Future Growth loan scheme for SMEs in the SME, agriculture and food sectors worth €300 million, and the provision of over €110 million for preparation across a number of Departments. We are concerned however that the Government seems to be preparing support for Brexit based on the assumption that a deal will be done between the EU and the UK and has not factored in the potential for a no-deal crash-out by the UK. The risk of the latter remains high and the impact to the Irish economy severe.
In particular, we are disappointed that the Government chose not to address the impact of the current Import VAT regime on Irish Supply Chains and potential cashflow problems on importers. A 6 month deferred accounting of the Import VAT scheme, as proposed by the IEA, would greatly support Irish businesses. In the event of a crash-out Brexit, the impact on Irish Businesses’ from having to pay Vat on UK imports at the point of entry of up to 23% on some imports could seriously impact their cashflow and competitiveness
In addition, by only raising the Earned Income Credit for the self-employed by €200, the Government missed a prime opportunity to create a level playing field between PAYE workers and the self-employed.
Throughout 2018, the international trading environment has become increasingly uncertain, raising costs for exporters. We therefore welcome the announcement of a Rainy Day Fund capitalised by €1.5 billion from the Ireland Strategic Investment Fund and supplemented with an annual contribution of €500 million from the Exchequer starting in 2019, is an important safety robe to protect the State and Irish businesses from outside economic shocks.
We particularly welcome Minister Donohoe’s announcement of an allocation €10.8 billion for the Department of Education and Skills, in particular a strong focus on developing labour market skills through traineeships, Skillnet Ireland and Springboard. To address business skilling needs, funding allocation needs to be flexible and applicable to different training schemes. We call for some of this funding to be made available to companies to draw down on to avail of specific on-the-job competence building training.
Capital investment is crucially needed to improve and expand Ireland’s public transport and infrastructure and services. In this respect, we welcome today’s announcement of €285 million of investment for major transport infrastructure works at Knock Ireland West airport and the N4 Colooney to Castlebaldwin scheme. However, more capital investment is needed to address substantial infrastructure shortcomings Broadband availability throughout the country remains shameful and a key opportunity was missed to bring Ireland’s capacity onto the 21st Century in this budget.
The IEA also welcomes the allocated funding of €950 million for the Department of Business, Enterprise and Innovation to support SMEs address the challenges posed by Brexit and increasing digitalisation. In this regard, we very much welcome the establishment of a Disruptive Technologies Innovation Fund worth €500 million under the National Development Plan. Along with the €110m earmarked across Government we hope this money is wisely spent to increase our diplomatic missions abroad, the presence of our agencies and on increasing the number of competent officials in the Department Agriculture, Food and the Marine to deal with the increasing demands for market entry support into further flung markets.”