Brendan Smith (Cavan-Monaghan, Fianna Fail)
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122. To ask the Minister for Finance the measures he proposes to implement to assist the retail sector to retain business due to the potential loss of trade to Northern Ireland due to the reduction in the value of sterling; if his attention has been drawn to the widespread concerns of the retail sector, particularly in the Border region; and if he will make a statement on the matter. [33644/16]

Michael Noonan (Limerick City, Fine Gael)
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I am aware, as is my Department, of the impact of recent exchange rate developments on the retail sector, particularly in the border region.

Since the UK's vote on the 23rd June the euro has appreciated by over 15 per cent against sterling and is currently trading at around €1 = £0.89 with adverse implications for the Irish economy in general, most notably for Irish exports to the UK and also for areas/sectors sensitive to cross border trade.

From a macroeconomic perspective, the best way to deal with such a shock is through prudent management of the public finances. That is what this Government is doing. This will help enhance the resilience of the Irish economy.

At a more micro-economic level, Budget 2017 contains several measures designed to ensure that firms in Ireland - especially those in the SME sector - are prepared for a potentially more difficult trading environment. This includes tailoring the wide range of State supports currently available such as low cost credit and increased credit supply from the Strategic Banking Corporation of Ireland (SBCI); funding for growth and efficiency from Enterprise Ireland; and financing for micro enterprises from Microfinance Ireland so that they provide effective support to SMEs affected by challenges arising from the UK referendum. Furthermore, there are a number of additional supports for SME credit coming on stream, including a €150 million agri-loan fund; and a revamped Credit Guarantee Scheme. An SME-focused, share-based incentive scheme, is also planned to be introduced in Budget 2018.   

Further, Budget 2017 retained the reduced 9 per cent VAT rate for the hospitality sector a measure  sought by Retail Ireland in their pre-budget submission.

It is crucial to maintain competitiveness and in particular in those areas in which we can influence, as clearly we cannot affect exchange rate developments. It is also important to stress that the recent depreciation of sterling is likely to increase UK consumer prices in the near term as increases in import prices give rise to additional inflationary pressures. Conversely, there are some signs that recent exchange rate developments are benefitting consumer prices in Ireland which have fallen by almost 1 per cent since the referendum. This will help mitigate some of the negative impact on the retail sector in Ireland from the depreciation in sterling.