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Job Losses

Irish businesses 'will need €1.5bn' to prevent job losses if there is a no-deal Brexit

Many firms face collapse if supports are not urgently put in place, Ibec has warned.

STATE AID WORTH €1.5 billion over the next three years will be needed to stabilise the economy and protect jobs if the UK crashes out of the European Union without a deal at the end of the month, Ibec has warned.

Prior to Budget 2020 being announced tomorrow, the business lobby group said “decisive intervention” is “needed to support vulnerable workers and businesses”.

A report published today warned that a no-deal Brexit would deliver “a major shock” to the rural economy in particular.

“Those most vulnerable to job losses are already living in areas with fewer opportunities, a lack of other viable employment and lower incomes. The companies most exposed are both capital-intensive and low-margin.

“If firms collapse in a no-deal scenario they will not be easily replaced. Decisive and far-reaching government intervention would be required to protect jobs and support vulnerable, but viable, firms from day one.

“The risk of a ‘no deal’ is imminent and action is required immediately,” Ibec Chief Economist Gerard Brady said.

Ibec has called on the government to take a number of steps to mitigate the risks a no-deal Brexit would create.

The group wants an enhanced Enterprise Stabilisation Fund, in the same vein as what was available during the height of the financial crisis in 2009, to be introduced. Ibec said this would “fund viable companies in temporary difficulty due to a no-deal Brexit, and would, by achieving a sound, robust and sustainable business plan, allow them to be financially viable in the medium term”.

New tariffs

In order to maintain jobs in “viable but vulnerable firms” where short-time work is not possible, Ibec wants the government to introduce an employment subsidy scheme, with subsidies up to €10,000 over 24 months for employees in firms in distress.

To assist with cash flow in SMEs, the government should “accelerate” the current SME credit guarantee scheme’s coverage of invoice discounting and factoring arrangements in Brexit-impacted firms, in-line with State Aid rules, according to Ibec.

The organisation said that, to help companies diversify, a new scheme for export credit insurance aimed at companies impacted by Brexit who want to diversify away from the UK, should also be introduced.

“Timing is of the essence,” Brady said, adding: “Our experience from 2009 shows that it took 10 months from agreement on a State Aid framework at a European level until companies could draw down supports.

In a no-deal scenario, if supports were not available until the middle of 2020 it would be far too late to sustain enterprises and jobs in many areas.

Brady said legislation and structures need to be put in place to administer these schemes as soon as possible. He said the measures could be partly funded by new tariffs that will have to be levied on Irish imports from the UK.

Britain is due to leave the EU on 31 October, and Budget 2020 will reflect the risks posed by a no-deal Brexit.

Speaking at a Fine Gael fundraiser on Saturday night, Taoiseach Leo Varadkar said the exact figure of the Brexit packages in Budget 2020 had yet to be settled on, but added that it will involve a “financial package to save jobs and businesses that are viable in the long term but may be vulnerable as a consequence of Brexit”.

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