EI gives cautious outlook for 2020

The food sector, which is particularly pertinent in Cavan, Monaghan and the rest of the region, grew at a more moderate pace of 3% to €12.17bn, reflecting an impact from commodity pricing and Brexit uncertainty.

Enterprise Ireland, the state agency responsible for helping Irish companies export to international markets, has reported strong levels of export performance by its client companies in 2019, up 8% to €25.6bn.

In 2019 exports to the Eurozone region saw record growth of 15% to €5.6bn, while exports to North America increased by 16% to €4.7bn last year. These performances reflect Enterprise Ireland’s emphasis on the importance of diversifying into new markets as a result of Brexit.

Last year saw the construction sector record significant growth, up 19% on 2018 to €2.24bn and digital technologies grew by 11% to €2.41bn.

The food sector, which is particularly pertinent in Cavan, Monaghan and the rest of the region, grew at a more moderate pace of 3% to €12.17bn, reflecting an impact from commodity pricing and Brexit uncertainty.

The overall dependence on the UK market reduced to 31% of total exports, down from 42% ten years ago, a key focus of the Enterprise Ireland diversification strategy.

2019 also saw 221,895 people employed in companies supported by Enterprise Ireland. Some 65% of these jobs are located outside Dublin.

However, Enterprise Ireland is cautioning that 2020 will be very challenging for many Irish exporters due to Covid-19.

The first half of 2020 paints a different picture to 2019 and Irish companies trading internationally have been impacted in every market due to the global nature of the Covid-19 pandemic.

Covid-19 has had a negative impact on order books and international market confidence. New contracts won by Enterprise Ireland-backed companies declined by 12% in the first half of 2020.

Enterprise Ireland said that approximately 1,000 client companies are impacted by Covid-19 and that there are 300 companies who are very exposed to Covid-19 and also have high levels of exports to the UK.

Of these 1,000 companies 75% reported that their exports have been impacted by Covid-19 and more than half saw a negative impact on cashflows.

The agency has warned that the impact on exporters for the latter half of 2020 will be very challenging and that they face the dual challenge of both dealing with the Covid-19 impact on their business and also the impending January 1st Brexit deadline.

Tánaiste and Minister for Enterprise, Trade and Employment, Leo Varadkar, TD, said: “Before the onset of the Covid-19 pandemic, Enterprise Ireland backed companies had already faced challenging circumstances due to the uncertainty caused by Brexit. Despite this, Irish exporters had a really strong year in 2019, with record levels of growth.

“We have already put in place a range of measures to help businesses get through the unprecedented difficulties caused by Covid-19, including grants, low cost loans and deferred tax liabilities. We know we need to do more as our economy continues to reopen. The July Jobs Stimulus will be far reaching and of scale to get our people back to work and get us back on the road to growth and prosperity.”

Julie Sinnamon, CEO of Enterprise Ireland added: “2019 demonstrated the innovation, ambition and vision that drives the Irish manufacturing and exporting sector. The strong 2019 results mean that many companies began this year in a resilient position.

“Indeed, since the outbreak of the Covid-19 pandemic we’ve seen many Irish businesses pivot in response to emerging market needs in areas such as contact tracing, traveller safety and confidence in airports and hygiene transparency in the hospitality sector. Agility and diversification are essential as we seek to trade successfully in a radically changed world.

“The second half of 2020, however, is expected to be one of the most challenging facing Irish businesses in recent history. Not only have many businesses been impacted by a significant reduction in customer demand from markets across the world due to Covid-19, but they are also facing the largest structural change to trading with the UK in over fifty years.

“Brexit is now a reality and from the 1st January, for the first time, Irish exporters to the UK are going to be faced with new changes to customs procedures, regulatory alignment and, undoubtedly, additional costs. Every Irish exporter must now ensure that they take action in terms of securing their supply chains, customer base and meeting new regulatory requirements and ensure they are ready for January 1st. Enterprise Ireland is ready and willing to assist them in this vital work.”