Dr. Mark Cassidy:

I thank the Deputy. I will try to address each question in turn. I will first refer specifically to the chemicals sector, including in the context of the figures to which the Deputy referred. The fact that he referred to them is absolutely correct but I can update the position slightly because we have a few more data. Overall, there was strong export growth in the economy last year. If the contribution of the chemicals sector is excluded, it was approximately zero. It was slightly negative at the time we produced the box. We now have an additional two months' data. Effectively, there would have been no overall export growth in the economy last year without the chemicals sector. Some 55% of our goods exports are chemicals and pharmaceuticals and 47% of our services exports relate to IT. Therefore, there is the high degree of sectoral reliance that the Deputy referred to. I will come back to that because it is very relevant to the final part of the Deputy's question. We export a lot of chemicals to the United Kingdom. We do not believe that this sector will be particularly affected. There are no tariffs in the chemicals sector. Non-tariff barriers are much lower. The chemicals sector is a highly profitable sector in any event. When we talk about sectoral effects, we should note that while a large proportion of chemical exports goes to the United Kingdom, we do not have chemicals in mind.

We very much have in mind the agrifood sector. I will come back to that. We also have in mind Irish exporters across other parts of the economy. Exports from Ireland to the United Kingdom comprise only 11.5% of our total exports. That is a very misleading figure because that total export figure is boosted so much by the chemicals exports. That is a goods figure. Some 43% of the exports of Irish-owned firms go to the United Kingdom. Therefore, Irish-owned firms are extremely vulnerable to the effects of Brexit.

Let me first mention the food and agriculture sector and then some of the other affected SMEs. Last year, 42% of our food exports went to the United Kingdom. Exporters of beef, other meat products and dairy are very exposed. Tariffs on food products are by far the highest among any types of products. The ESRI has estimated that the effective tariff on meat products in a no-deal Brexit would be 59%, or almost 60%. On dairy products, it would be 47%. Food and agricultural products involve moving time-sensitive goods and goods that are fresh and need to be moved quickly. They are also most subject to regulatory delays, such as phytosanitary checks. The food and agriculture sector is undoubtedly extremely vulnerable to a no-deal, hard Brexit. The ESRI has estimated that whereas overall exports to the United Kingdom could fall by 20% in the worst-case scenario, the decline in exports of beef could be 65% and the decline in exports of dairy could be 60%. The agrifood sector is, therefore, extremely exposed to a disorderly no-deal Brexit.

There are Irish-owned SMEs across a range of sectors that are particularly exposed. In the region of 93% of the firms that export to the United Kingdom are Irish-owned SMEs. Around half of those have no export market apart from the United Kingdom. Therefore, there are many firms in other sectors of the economy that will also be affected. In addition, many of the small and medium enterprises that do not export to the United Kingdom import intermediate products from the United Kingdom. The restrictions on trade, trade friction and the like will increase costs and may reduce the availability of those intermediate products, thus affecting the supply chains and production processes of SMEs. All parts of the indigenous enterprise sector will be affected rather than the multinational sector, which tends to be much more diversified. It tends to have much more experience and skill in exporting to different countries at the same time, and it tends to be less vulnerable to tariffs and non-tariff barriers. I have outlined the sectors of the economy that we believe are most exposed.

I agree that we are extremely reliant on the multinational sector. This sector continues to serve Ireland extremely well. It contributes significantly in terms of employment created, revenues for the Exchequer and the contribution to overall growth. It creates higher-paid employment than other sectors of the economy. There is also evidence, although perhaps not as much as we would like, of skills transfers to other parts of the economy. That needs to be balanced against the fact that there is a high degree of reliance. The top five multinationals account for approximately 33% of goods exports. We are vulnerable to any downturn affecting multinationals, be it a shock to one of the individual firms, a shock to one of the relevant sectors - be it chemicals and pharmaceuticals or computer services - or a shock to the global trading arrangements.

The other potential impact is if the multinational sector crowds out the indigenous sectors as opposed to being a complimentary force within the economy, that is, if it is able to pay higher wages and obtain more skilled workers or capital. What we need to ensure is not a change of the economic model. We strongly need to encourage the multinational sector and provide a supportive environment but, to reduce the two risks, we need to do two things in addition. First, public finances must not be overly reliant on the revenues from the multinational sector and the corporation tax revenue, which is so high, at 19%. Second, we need to ensure that we have a dynamic, successful indigenous sector in the economy. If anything, Brexit will accelerate the diversification in terms of exports because many producers will need to find new markets. Developing and supporting that sector needs to be a very important part of policy.