Mr. Simon McKeever:

There is one overall backstop, according RTÉ's correspondent in Brussels, a UK-wide customs arrangement with deeper provisions for Northern Ireland customs and regulations, with a review mechanism included. I gather that Ms Theresa May is calling her Cabinet in tomorrow morning to agree on that. We will see how that goes in terms of making its way through the House of Commons.

I will start with Senator Lombard's question about our level of preparedness. When I speak to people from the UK and to officials who come over here, they are astonished by the four Brexit events hosted by the Tánaiste, Deputy Coveney, and by the fact that the Government has taken the time and made the effort to bring people together to spell out, as far as possible, the potential impact of Brexit. It is probably easier to do that in a country like Ireland than it would be in the UK. However, my sense of it is that we have been preparing for a deal rather than for a no-deal scenario. As a country we do not have a plan B in place in the event of a British crash out, and I am very worried about that. A lot of work has been done on raising awareness but we have not begun to look at how we might help people to deal with practical things like the customs implications, for example. I will deal with the related question about the threat of additional costs arising from that in due course.

In terms of the level of preparedness of our members, we have seen three or four things going on since the vote. In the immediate run-up to the vote and just after it, the focus was on currency and currency management. That persisted until around February last year, at which point we began to get a lot of queries on how to deal with customs. Customs has been the predominant issue for us. We provide training courses on customs, the authorised economic operator, AEO, and so on. We put on a course in August and thought that it might not be filled but it was four times oversubscribed. We ended up having to run a number of additional courses in September. There is considerable demand for information on customs at the moment. Interest this year has mainly been in market diversification and how companies can get into other markets, although concern about currency has crept back into the equation recently. In a recent survey, we asked our members the point at which their margin disappears in the UK. Specifically we asked them at what rate the euro-sterling exchange rate impacts their company's margin in the UK, and around 42% said between 90 and 95, which is not very far above the rate at the moment. Another 30% said between 95 and 1, which is quite worrying.

Anecdotal evidence on the preparedness of our members suggests that the bigger companies are better prepared. The foreign-owned, large multinational companies are far more prepared than the Irish-owned large companies, which in turn are more prepared than the medium-sized and smaller companies, and so on. Companies are less and less prepared in direct proportion to their size. There is a high level of awareness of Brexit and its implications, but many of the smaller companies are time poor and are unable to deal with it while the larger, globalised companies can put a team together to address it. We asked our members who was responsible for Brexit in their organisation and found that a lot of companies have Brexit teams in place.

The Senator also asked if the business community is engaging on Brexit. We are seeing increasing engagement all of the time. The four Getting Ireland Brexit Ready events, for example, were very well received by our members. To my knowledge, the UK is not doing the same thing. On the relative readiness of the UK, I do not think they are very ready at all. I was speaking at a conference on food, agriculture and farming in London last week and was quite shocked by what I saw and heard. The conference was attended by some very senior retailers and producers and involved a panel of four or five speakers, most of whom spoke for 40 minutes. My abiding sense, having listened to them speak, was one of “keep calm and carry on”. There was a sense that they knew they were heading towards the cliff like lemmings but that they would prevail somehow and deal with it. I was quite shocked by that. I got a sense from the farming community over there, having listened to various speakers, that it is less bothered about Brexit than others. Farmers believe that when they pull out of CAP, the UK Government will provide subvention, they will be able to farm in whatever way they want, and because they are going to do fabulous trade deals with countries all over the world, they will be able to sell food to markets all over the world. They were not prepared to ask questions about cheap food policy and what it will do to undermine standards and so on. In no way, shape or form, when one looks at regulatory equivalence, are environmental or labour standards being included in the conversation. The farming representatives attending that conference were talking about a massive labour shortage in the fields in the context of getting stuff out of the ground.

As to whether there are any potential positives from Brexit, I see very little except perhaps that it is forcing Irish companies to look further afield, if they can, and to diversify their markets. I do not see any positives on a national economic level really, although there is some evidence that Brexit is making Ireland a much more attractive country in which to locate in terms of retaining access to the European Union.

We have done a lot of work in creating an awareness of Brexit but our action has been focused on a deal and not on a crash-out. I think that despite what has been agreed, there is still a grave danger of a crash out.

Senator Daly asked if there is disarray in the UK among SMEs. I have referred already to what I heard in London last week. When I spoke to some of the companies, I found that they were very divided. There are very few business leaders in the UK who will stand up and say what they believe. There is a lack of leadership within business in the UK in terms of talking to the Government and trying to influence policy. People seem to be terrified to open their mouths. Very few companies got involved in the Brexit referendum debate. I am not aware of any national preparedness events akin to what is happening here but representatives from the British-Irish Chamber of Commerce might have more information on that.

The sourcing of raw materials is a big issue for Irish companies and not just in the context of tariffs or delays caused by additional customs procedures but also in the context of import VAT. Once the UK becomes a third country, VAT of 23% will be imposed on goods coming from the UK at the point of entry.

There are deferrals in operation at present. Revenue will give a deferral to the 15th day of the following month. If a company brings its goods in on the 16th day of the month, it gets 29 days or 30 days but if it brings them in on the 14th day of the month, it gets a day. Other countries in the European Union, such as Greece, have managed to get a delay of up to three months. There is no reason why we, as a nation, should not be looking to do that. It means it will affect the Government's cashflow but it will help the cashflow of companies. We should think of the number of small companies whose margin or cashflow could potentially be wiped out. Look at what happened to the mushroom farmers. There was a 23% hit to their bottom line immediately. It will have a massive impact.

Anecdotally we are hearing stories about some European companies telling their suppliers they need to start looking at where they are buying their stuff from and that perhaps Ireland and the UK are not the best places to be getting it from. We are hearing that anecdotally. A set of EU contingency plans were published by the EU today, details of which are just starting to work out. What happens when we go off a cliff edge? Will bollards come up on the Border? I do not think so. Unless there is time to put infrastructure in place, I assume trade will continue until all the stops and checks can be put in place. Will there be a dramatic stop to everything overnight? I am not quite sure the infrastructure is there, either in terms of physical infrastructure or personnel, to be able to do that. There is much talk about the Prime Minister in the UK saying the UK will not put border infrastructure up. Many people have said the Taoiseach said exactly the same thing. There will be no physical border. If there is no border between Ireland and Great Britain, does that mean the border moves to the coast of France? If the European Union is going to preserve the integrity of the Single Market, it will not want cheap food and unregulated stuff coming into the European Union via Northern Ireland. Where does the border end up being? Is it in France? In terms of whether it is a cliff edge, I do not know what will happen in that context.