Mr. Neil McDonnell:

I thank committee members for the invitation to appear before them. I do not intend to provide a macroeconomic analysis of the effects on small businesses of a Brexit on WTO terms. The economic effects have been well ventilated elsewhere. Brexit has been impacting on business directly for the last year, stalling investment decisions, changing marketing policies, curtailing employment in at-risk areas and, most importantly, reducing confidence.

Among members of the Irish SME Association, ISME, the quarterly business confidence indicator we employ to analyse business sentiment has not been so low since 2011. We thought this would lift after the postponement of Brexit in March, but it has not. Members told us that they had invested in inventories because of hard Brexit fears. These inventories are now being liquidated. Businesses face the same cycle again, building inventories ahead of the October deadline without any clarity on whether such inventories will be needed and sucking up working capital and management time. Brexit now ranks ahead of even insurance as a business concern for our members.

While we acknowledge the political difficulties in concluding a withdrawal agreement with the United Kingdom when that country has not come to an internal agreement on how to exit the European Union, we need creative solutions for how to assist our nearest neighbour and largest trading partner. The backstop may or may not be the material obstacle to the conclusion of a withdrawal agreement that some suggest it is. However, blind adherence by Ireland to the maintenance of the backstop could prove to be a costly policy if it proves to be the root cause in producing that which it seeks to avoid. Therefore, we ask legislators to be imaginative and flexible in their approach to what may be the end-game discussions on Brexit.

Small businesses lack the expertise, bandwidth, foresight, finance and, most of all, the time to carry out contingency planning for every conceivable form of Brexit. They rely on their political representatives and State and local authority agencies to assist them. More worryingly, many have adopted a fatalistic wait and see approach. As the committee has just heard, the low uptake of EORI numbers is indicative of this.

We are conscious of our duties as a trade association in helping SMEs to prepare for Brexit, despite the uncertainties. Brexit assistance measures are included in all of our communications with members and roadshows. We have a dedicated website area for all matters related to Brexit. However, members will need more than information in November. In particular, small businesses do not wish to take on more debt while addressing a problem that could reduce sales or increase their cost. That does not make sense, but it does explain why the Brexit loan scheme has been less successful than legislators might have intended. We wish members of the Oireachtas well in the crucial four months ahead. ISME will assist committee members and the Government in any way it can in preparing for Brexit.