Dr. Pat Ivory:

I am grateful to have another opportunity to set out the views and concerns of business on the crucial issue of Brexit. IBEC is the country's largest business organisation. In recent years we have been working intensively to support our member companies as they manage the ongoing uncertainty and plan for potential Brexit disruption. In many respects, the headline concerns of business, unfortunately, remain unchanged since we last addressed the joint committee two years ago. Political developments have, however, crystallised the immediate risks. The failure of the UK Government to ratify the withdrawal agreement has left business with the complex task and enormous cost of managing the uncertainty of moving Brexit deadlines. Millions of euro have been spent in putting in place and, in many cases, activating costly contingency plans.

The divisive and ongoing polarisation of the UK political debate has increased the likelihood of a no-deal outcome, further driving up the cost of contingency planning. Irish business supports the terms of the withdrawal agreement which comprehensively addresses the key challenges that arise in the exit process and the transition period associated with the agreement. From the perspective of business, customs and regulatory alignment across the island of Ireland is vital to avoid the return of a hard border, safeguard the all-island economy and protect the Good Friday agreement.

In recent months IBEC's work to support contingency planning has intensified. We have produced comprehensive guidance for business and hosted numerous events, providing a detailed expert insight into the complex issues that will need to be managed in such a scenario. While our members are very aware of the risks and planning accordingly, it would be wrong to suggest business, or the wider economy for that matter, could ever be ready for the profound overnight changes a no-deal Brexit at the end of October would involve. Despite the best efforts of business, successfully adjusting to a radically new trading environment with the United Kingdom is neither possible nor realistic, particularly for companies in the most exposed sectors in a no-deal scenario as there are too many variables and unknowns. What we do know is that the imposition of very high World Trade Organization, WTO, tariffs on certain goods, combined with additional customs and regulatory barriers, would cause major trade disruption. There is also the risk of increased illicit trade and smuggling across a range of products in a no-deal scenario.

Even in a worst case no-deal scenario we will need phased implementation of a new trading relationship and a compliance trajectory that will minimise disruption.

The political brinksmanship involved in setting non-credible deadlines has already cost the business community. Additional collateral damage must be avoided.

The European Commission's claim that contingency planning is complete does not reflect the complex challenges on the ground. In that context, further measures are urgently needed such as moratoria to facilitate data exchange and flows, the roll-over of current product labelling regimes and measures in other areas where it is simply impossible for business to change overnight. While most larger companies have comprehensive plans in place, many SMEs are ill-prepared. Despite major information campaigns, about 46,000 small companies of the 84,000 that trade with the United Kingdom have yet to register for the economic operator and registration identification, EORI, number that will be necessary to continue to trade post Brexit. There is still a job to be done.

While IBEC's work to support contingency planning will continue, it must be stressed that significant Government and EU interventions will be required to protect jobs and businesses if there is a no-deal outcome. It is important that the European Commission and the Government have fully developed and comprehensive plans that can be triggered without delay in such circumstances. The economic hit will be immediate; so too must the response.

Certain issues have been addressed in the Withdrawal of the United Kingdom from the European Union (Consequential Provisions) Act 2019 such as the treatment of VAT on UK imports. However, a much more far-reaching state aid programme would be required in these circumstances. It would need to include a new enterprise stabilisation fund to provide short-term financing support for affected companies; direct capital, marketing and innovation supports for companies reorienting into new markets beyond the UK; and new trade support measures, including further export trade financing and export credit guarantees. IBEC has outlined these proposals to the Government in detail and we continue to work with the relevant Departments and agencies to prepare for all scenarios.

As we move towards another Brexit deadline, the macroeconomic backdrop remains benign. No other economy in western Europe had greater momentum entering 2019. However, a no-deal UK exit would significantly reframe the economic outlook and involve a major sterling depreciation, cancelled investment, falling consumer confidence, rising prices and significant trade disruption. It is crucial, therefore, that all efforts be focused on avoiding such an eventuality.

I thank committee members for their time. We look forward to answering questions they may have.