Mr. John McGrane:

The State cannot magic away the reality of what has happened as a consequence of a democratic act by a neighbouring state. As a result the markets have regarded the value of sterling as significantly weaker than it was before. The State can do some of the things already discussed, support to help diversify for companies which can consider reducing their dependency on sterling trade into other markets and give qualitative supports rather than handouts, in terms of market development. Enterprise Ireland and others do very good work in this area.

A total of 40% of the exports of our indigenous exporting firms goes to the UK. That is significantly more than the exports of our international foreign direct investor friends who export only 16% to the UK. Those indigenous firms are in many cases family businesses, not only in the urban metropolitan areas but all around the country. Those indigenous firms create more new jobs in the economy annually than foreign direct investment firms. They are very important at every level. Encouraging them to diversify their markets, to open up new lines of sales into France, Germany or China, for example, is good advice but it is extremely difficult for the firms involved to put into effect at any kind of reasonable pace. That takes a long time to do. Ireland exports less to the UK now than it did 20 years ago as a proportion of our total exports but that is because we have been very good at developing other lines of business more globally, including with the help of our EU membership. It is not realistic to think that many Irish firms can simply switch to other markets. In the short term the solutions are hard work for some of those firms, they have to concentrate on being more innovative to find other ways to reduce their costs. Some will need to respond by thinking about moving some of their cost base to a sterling cost base. In the simplest terms, a call centre in Dundalk has the operational choice to unplug the phones in Dundalk and move them to Newry. That is not a facile example because a call centre works on margins of less than 15%, which are pretty good margins but the currency has slipped by 17% so those call centres are losing money and they need to think about their options to save the business and such jobs in Ireland as they can save by diversifying into the sterling area.

Some of the firms that rely on exports to the UK can be helped to stomach the reduction in the unit value of their sales to the UK because of sterling collapse by opening up additional sales into the UK. That is slightly counterintuitive but they may be able to compensate for reduced unit margins by increasing overall volume, depending on other factors in their cost formula. It is definitely worth keeping on the list to think about firms which know how to do business in the UK but could get more customers in the UK and might be helped by Enterprise Ireland and others.