Ms Patricia Callan:

It is welcome that the joint committee is placing a focus on this really important area. We have been engaging a great deal with Departments, particularly the Departments of Jobs, Enterprise and Innovation and Finance, to find practical, short-term solutions to the problems arising from Brexit. There are many people with good will who are acting to deal with them. What we need is a cohesive national strategy in order that we all know who to whom we should talk.

There are 238,000 businesses in Ireland, of which 98% are small in that they employ fewer than 50 people. In more than 21 counties they employ more than 50% of the workforce. It is important that in this analysis we also look at their needs. We need to realise that the agencies have for many years been working to try to increase exports, but the figure for total exports still amounts to only 6.4%. While there has been a massive effort made to diversify beyond the United Kingdom, this has not yet been achieved. We need to be realistic about where we were before Brexit in trying to get companies to internationalise. That is difficult and tough to do; therefore, we need to look at the issue in the context of the removal of Ireland from the United Kingdom.

Like many organisations, we also engaged in an analysis after the vote which indicated that the main issues of concern were exchange rate movements, which have since come to pass, the cost of exporting and pricing. Small companies do not tend to have sophisticated instruments such that when we asked our members about hedging, 85% stated they had no hedging mechanisms in place, while 87% stated they had no pricing agreements in place. Even though they are the suppliers, in terms of the relationship between them, it is very much the case that the companies to which they are selling are dictating the terms of sale and payment. That is an issue for consideration. Some companies did identify positives. While recent discussions have been very much focused on the negatives, we need a separate strategy for how we can use exchange rate movements in our favour, how we can win in-bound investment projects and the better pricing relationships we might be able to negotiate in certain sectors.

We are all here as business bodies which represent their members. There is huge disengagement and an air of unreality in the business community. People still do not have contingency plans in place. Most think this is not going to affect them. The message we need to get out is that it is not only exporters but also the sub-supply chain, the retail sector, the tourism industry and so on that will be affected. We need a plan for all of these sectors. The companies that do not know that they are going to be impacted on are probably the most vulnerable. At least, exporters are trying to put a plan in place. We need to take an holistic view. There are a number of priority and other actions that should be taken in the short, medium and longer term, bearing in mind the fact that in most businesses the margins are pretty tight, particularly in small firms.

Sterling has devalued 18% since the date of the vote but 28% since last December. I do not know anyone in business who makes more than 30% and, therefore, everybody in this market is loss making at this point and it is a question of how long they can hang in there. I have included one e-mail from a member in the submission, which will give the committee a flavour of what his company is trying to do. It is a food company in the midlands which employs just under 50 people. It has had to let go €2.7 million in revenue. It cannot afford to service existing contracts because they are so loss making. It is not just about the raw agricultural products market; prepared consumer foods are low margin businesses. We have had huge success in this market but with most of those products, it is not a question of being able to go to France or Germany. Irish and British tastes are the same; we consume the same types of food. Those foods are not eaten on the Continent and, therefore, there is no market for them. If we want to have a food sector in two years, we have to act now. When Brexit happens, we will secure many competitive advantages but if we have not kept this sector going for the intervening two years, companies will not be around to compete with British imports in two years.

That means we need to push hard on state aid rules. Every time we talk to Government officials, we are told we cannot do that repeatedly. It is time to reframe this into what can we do. We have to take this to the EU and make the case that this is an exceptional time and Brexit will have an exceptional impact on our country. The temporary state aid rules which they were well able to introduce in 2009 during the financial crisis should be invoked once more. We should be allowed to use those and develop schemes such as the enterprise stabilisation fund. State aid takes time. Even if we were to get a scheme through, it would take six to 12 months. In practical terms, we are realistic in the short term and we need to focus more on innovative financing measures because they are not subject to the same rules. Some companies will simply need cash to help them while financing instruments will help others but all the options need to be considered now. Whenever a decision is taken, there will be a long chain to get it through.

With regard to low cost financing measures, the budget provides for a scheme in the agriculture sector. That is attractive and I understand from the SBCI that it will have products in the market by January. We need to examine that as a model to see whether such low cost loans could be made available to small companies. We have had ongoing discussions with the Department of Finance for the best part of four years about export credit insurance. We have conducted surveys for officials and they have all this analysis. They are meant to bring forward an export finance product and we would like to see that. If we have done all this work, let us get those products go to market and have a sense of urgency.

It is important to realise that this is not just about exports. Our supermarkets are hard to deal with as a supplier. They will replace Irish products with cheap UK imports and, therefore, a national public awareness campaign needs to be run about the impact of that choice and about the fact that consumers choosing to buy those cheaper products will kill off the food sector at the same time. Much of the time, this is a public consciousness issue about raising awareness and that needs to be done in the lead-up to Christmas. Cross-Border shopping is a particular issue but this will be seen in every shop.

Similarly, we have had on ongoing discussion about why more companies are not trading online. It will be a €20 billion market in the next five years and most small companies do not have an online presence and do not have the capacity to take orders online. The online trading voucher scheme is a successful model but that is restricted to micro companies with fewer than ten employees. Most retailers have more employees than that. Measures we know will succeed in the short term need to be ramped up to give people a broader reach in terms of their marketplace.

The top issue for our members immediately after the decision for the short, medium and long term was the freedom of movement of people and that border aspect will be critical. Colleagues have referred to the renewed cost focus in terms of cost competitiveness and the tax competitiveness issue versus the UK. When the UK leaves the EU, it clearly will not have state aid or be subject to public procurement directives and it will be out there to compete with us. We need to be conscious of that as well as the opportunities open to us from being within the EU market.