We warned you! Irish firms suffer ‘double whammy’ of EU red tape
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The UK’s departure from the European Union was said to be having a substantial impact on businesses in Ireland. It was claimed that the introduction of new trade rules has forced them to alter supply chains and export strategies to avoid getting slapped by delays. Some 37 percent of firms surveyed for the Grant Thornton Ireland’s International Business Report said they were experiencing longer lead times.
It was found that 22 percent needed to recruit new global suppliers and 21 percent found alternative suppliers within Ireland.
And 17 percent said they had outsourced or recruited people to deal with the additional bureaucracy introduced under the post-Brexit trade agreement.
More than half of businesses blamed Brexit red tape as a blockage to the future growth of their company.
Jarlath O’Keefe, of Grant Thornton Ireland, said: “It is likely going to get worse within the next 12 months, as the UK has been employing light touch up to now.”
During the negotiations for the EU-UK Trade and Corporation Agreement, Brussels insisted that Britain would be forced to comply with the bloc’s draconian trade rules.
To avoid any post-Brexit disruptions, the UK decided to enforce a temporary light-touch border on the British side of the English Channel.
The plan helped to ease the burden on businesses following the coronavirus crisis and the UK’s departure from the single market and customs union.
But from October, agricultural and certain other products imported into Britain will become subject to pre-notification requirements.
The UK food industry has been lobbying for the proposal to be cut from a period of 24 hours to four hours.
And from January 1, exports will require both EU and UK safety and security declarations.
Experts say this will create a “double whammy” of red tape. While as of March 2022, border checks will commence on live animals and certain plant products.
Mr O’Keefe said: “Irish businesses might need to have a customs agent in place at a UK port to make sure it runs smoothly, and that will be an extra cost.”
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He added that the “over-reliance of the past” on the UK was “no longer a reality” for two-thirds of Irish businesses.
Some of those firms are now exploring new growth opportunities in China and France.
“Businesses are looking to grow in other markets because they recognise that the UK can’t continue this light touch forever,” Mr O’Keefe said.
Senior executives from some 63 Irish businesses were surveyed for the report, which is part of Grant Thornton research with 5,000 mid-market businesses across 29 economies, conducted in the first half of 2021.
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Despite the impacts of Brexit and the COVID-19 pandemic, three-quarters of Irish businesses said they were confident about the future.
Janette Maxwell, associate director in tax at Grant Thornton Ireland, said: “Businesses remain optimistic for the future, but it’s clear that Brexit and the pandemic will have an impact on trade and growth into the future.
“International sales present an opportunity to mitigate the financial impact of these global events and, as the world opens up again, businesses will continue to look abroad for expansion of their operation, whether that’s in increased exports or in sourcing more efficient suppliers.”
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