The majority of Irish CEOs believe that Brexit will bring more challenges than opportunities, and one in three expect trade with the UK will decline post-Brexit.
These are some of the key findings revealed in PwC Ireland's CEO Brexit Survey. The survey took place in April 2017 as part of PwC’s 2017 CEO Pulse survey research. It canvassed the opinions of over 200 Irish CEOs participating across all key industry sectors. The full report which will be published later in July.
Among the other findings, 70% of CEOs believe that Ireland can do more to develop a national strategy to promote Ireland’s attractiveness as a location for investment post-Brexit.
Speaking about the findings of the survey, PwC Ireland Managing Partner Feargal O’Rourke said: “Brexit negotiations have started, but there is a long road ahead. Given the prevailing uncertainty, businesses need to plan for the worst. The facts remain that with the complexities of what lies ahead, any trade negotiations will likely take longer than two years to complete.
“A hard Brexit with no exit agreement or free-trade or transition arrangement by the end of March 2019 would be uncharted waters for Irish businesses.
"Ireland has done well to have its priorities included in the EU Brexit negotiating priorities agreed at the European Council EU27 meeting in April. It must be borne in mind, however, that Ireland will be only one of the EU27 bloc in any final ratifications.”
According to the survey, business confidence in the outlook for the next three years has fallen. Less than two-thirds 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.
Additionally, a third say that they expect a decline in their level of trade with the UK post-Brexit. An overwhelming majority are concerned about the flow of goods to and from the Republic.
Global Trade & Customs leader John O’Loughlin 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. Companies would be competing on a new global playing field."
"Additionally, non-tariff barriers such as customs compliance will drive incremental costs and potential border delays. Contracts would need to be reviewed in the context of who would bear duty at point of entry."
"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 e.g. inward processing relief.”
David McGee, PwC Ireland Brexit Partner said: “It is not surprising, with all of these risks and uncertainties, that a large majority of Irish business leaders believe Brexit will bring more challenges than opportunities. However, only one in ten reported to have a fully developed Brexit strategy in place.
What is clear is that businesses cannot wait for the negotiations to conclude and I would urge them to start planning for the scenarios immediately. Part of this planning should include how World Trade Organisation rules might impact their organisations, consideration of people mobility issues, a full scale review of suppliers to achieve greater cost competitiveness as well as further diversification of products and markets.”
The survey points to opportunities for Ireland as a result of Brexit. Over 40% see the greatest opportunity as being the potential for increased FDI based on Ireland being the only English speaking member state in the EU. Other opportunities include Ireland's EU passporting benefits and the opportunity for Ireland to play a more prominent role in the EU.
David McGee said: "Many Irish companies over the years and particularly since the recession have proven their ability to adjust to uncertainty. We are a small open export led economy and it will be very important that we continue to broaden our footprint in international markets.
"Our long standing trading relationships with the UK is crucial for Irish businesses. it is essential that we maintain our strong ties with our nearest neighbour in the future.”
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