Michael McGrath (Cork South Central, Fianna Fail)
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205. To ask the Minister for Finance his plans to explore the possibility of establishing a national hedging strategy, involving the expertise of the NTMA, which may be able to give practical assistance to Irish SMEs dependent on the UK export market which are currently suffering from the fall in sterling; and if he will make a statement on the matter. [30887/16]

Michael Noonan (Limerick City, Fine Gael)
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The UK referendum on EU membership has led to significant fluctuations in the value of Sterling against the euro and this presents challenges for Irish SMEs that export to the UK. 

These challenges make the current range of Government supports for the provision of credit even more vital as loans made to SMEs, on the basis of viable business plans, will give them time to diversify into other markets and reduce their exposure to the UK.

It is likely that the recent exchange rate movements may signal a longer term, rather than cyclical, change in the value of Sterling. While hedging can provide some measure of relief and provide SMEs with time to adapt to this change, it is not possible to fully mitigate the long-term impact of currency devaluation through hedging.

State backed, low cost credit can assist SMEs to restructure their cost bases and re-price their products and services so they can continue trading with the UK in the weaker Sterling environment. In this context, it is encouraging to note that SMEs can access lower cost, flexible finance from the Strategic Banking Corporation of Ireland (SBCI). To the end of June 2016, the SBCI has lent €347 million to 8,619 SMEs.

It would not be economically or fiscally sustainable for the State to subsidise an artificially set exchange rate. Indeed, EU State Aid Regulations prohibit countries from directly subsidising exchange rates and hedging products. However, it is important to note that there are multiple financial providers active in the Irish market that can provide a comprehensive and competitive range of hedging and foreign exchange products to SMEs who require them.

The Government will continue to monitor fluctuations in the exchange rate and ensure that the wide range of State supports currently available are tailored to ensure that they provide effective support to SMEs affected by challenges arising from the UK referendum on membership of the European Union.