Mr. Neil McDonnell:

I will take the questions in the order they arose. As to the soft balance sheet issue, as matters stand, small business sees itself in competition within a three-part economy. There is the small enterprise economy, the multinational economy and the State and semi-State economy. According to CSO figures, State employees are paid 35% more than private sector workers and multinational companies pay a premium above this again. Our people complain about trickle up in the employment market as it is. If Dublin were to become a refugee centre for even more big entities from London, the problem would be exacerbated. We are based on Kildare Street and we can see, as can committee members, what is happening on Molesworth Street with the number of entities moving in.

On EU suppliers, I echo the point made by Dr. Ivory. To give a practical example of this, I have a member in the cosmetics distribution business in Ireland which distributes a French cosmetics range that is a household name. It is packaged and labelled in the UK for the UK and Irish markets. Interestingly, my members have pointed out that there are commercial arrangements and licence distribution arrangements in place for the UK and Ireland that are held by UK companies. We have raised this matter with the Department of Business, Enterprise and Innovation and informed it that, in the event of a hard Brexit, some of these contracts may become unenforceable or a UK company may try to enforce a distribution contract that is unenforceable in Ireland. There are all sorts of issues. The French cosmetic products has its standard markings and English translation applied in the UK. That is not to say this cannot be replicated here or done somewhere else but it will be done at a significant cost. Alternatively, the UK could just agree to continue doing it and abide by the standards in place. That is a political consideration.

On the backstop alternatives, the difficulty with the backstop is that it has taken on a Jekyll and Hyde aspect. The political aspect, which has become unacceptable in the UK, is not fundamentally an area that occupies small business. The political difficulties with the backstop, as it is called, have taken on a life of their own, whereas from our perspective the backstop is an insurance policy and contingency policy against something bad happening. We see the backstop as a practical insurance policy against a bad event. There is total disconnect between the political imperative and the practical imperative.

We discussed the phytosanitary issue outside the room. What do we do with beef crossing the Border? It is acknowledged that there will have to be an all-island approach to this. Where it gets interesting is, for instance, in service businesses. I know I am dealing with some trade unionists here. Let us take a building company in Northern Ireland that decides in the brave new world that it will not comply with the working time directive. Will it be capable of tendering for business in the Republic? These are practical and legal considerations that will bother some of our members if Northern Ireland companies have the freedom to opt for particular regulatory regimes that are potentially anti-competitive and if, for example, our people are held to a 48-hour average working week but this requirement disappears elsewhere.

A substantial amount of the equipment purchased in the health service, particularly high-end kit, has been manufactured to British standards. These difficulties will go away if there is mutual recognition of standards but we have already complained to the Office of Government Procurement and the Department of Business, Enterprise and Innovation about so-called Brexit-proofing of contracts. There are tenders coming out from State and semi-State agencies stating they want to be insulated against possible consequences of Brexit, for instance, in the purchase of fixed assets that might be purchased under a British standard. Will that standard be acknowledged in future? These have serious implications for long-life assets.

The political point I made about the backstop is that when the Irish voted "No" in some European referenda in the past because of our red lines we succeeded in getting opt-outs that provided a political salve and opened up a way through for us. I would like to think something like this is achievable for the UK.

The Chairman asked about the international impact. ISME, like IBEC, is a member of a European business association, namely, SMEunited. I have to be honest and say that once we go beyond talking to the Dutch and Germans, there is not a huge amount of concern. Intellectually and in business terms, others have moved on. One of the difficulties that will emerge in any form of renegotiation is that people see commercial advantage in the UK leaving.

The notion that there will be hands reaching across the Channel to help the UK is a bit fanciful. This is not a significant concern outside the immediate Dover-Calais area. It is impossible to put a euro cost on uncertainty. If the Senator remembers the end of last year, the UK became the biggest purchaser for refrigeration facilities for medicines in the world, so one can start to put a high quantification on it. Ireland ran out of warehousing space. Nobody will build a warehouse for something that might not occur. What will happen is what is classically called rationing by price. Those that can afford to build inventories will do so and those who cannot will not, and they will accept the consequences.

With regard to state aid, most of what will be required is working capital. Our people are extremely reluctant to take on debt. That will be tricky to achieve within state aid rules. I am conscious that the State cannot just hand out money. The simple answer to how prepared businesses can be is that not all businesses can be prepared for every eventuality. Business has a tolerance for bad news. It just needs to be told it directly and honestly. There are not the same political considerations that one has to deal with with the electorate. People just want to quantify the worst case scenario and they are happy to put up with bad news.