Brexit 'uncertainty' curbing investment says analyst

Published: Mon 19 Feb 2018, 10:55 AM

Last updated: Mon 19 Feb 2018, 10:56 AM

The uncertainty caused by Brexit is curtailing expansion plans for businesses in Cavan and Monaghan, says a banking investment analyst.

“We have seen some companies curtail planned expansion into the UK market and instead concentrate on the domestic market and continental Europe. This is particularly relevant to the food manufacturing sector where there is a concern over what, if any, tariffs will be applied to exports,” says Ronan Foley of AIB’s Brexit Sentiment Index for Q4 2017.

Recognising that Border county transport and haulage companies continue to assess alternative routes to Europe, with some now considering establishing hubs in the UK, Mr Foley said that the UK and EU commitment around the movement of people has brought relief to many employers. In such cases, many Border towns have considerable staff travelling from cross-border on a daily basis. “We’re urging customers to undertake a Brexit risk assessment of their own business and develop a plan to counter these risks,” said Mr Foley, promoting AIB's own specialised Brexit advisers.

The AIB Brexit Sentiment Index for Q4 2017 reveals that despite the proposed withdrawal of Britain from the European Union, the majority of SMEs both north and south of the border have yet to put a formal Brexit plan in place, with only 6% of SMEs in the Republic of Ireland (ROI) and 2% in Northern Ireland (NI) having a plan.

The research shows that certain sectors view Brexit more negatively than others. In the ROI, the Manufacturing (-49) and Hospitality & Tourism (-40) sectors are the most negative about Brexit. In NI, meanwhile, the Retail (-45) and Hospitality & Tourism (-34) sectors continue to be the most downbeat.

The Index also shows that of the export focused SMEs in the ROI, 23% are looking into expanding into new markets with Europe, particularly Germany and France, leading the way.

Of the 36% of SMEs in the ROI which had plans to invest in their businesses prior to the Brexit vote, 10% are currently reviewing them, while 8% have cancelled or postponed them indefinitely. The situation in NI, meanwhile, is somewhat starker. Of the 44% of SMEs who had plans to invest, the survey shows that 23% have cancelled or postponed these plans while 6% are currently reviewing them.