Michael McGrath (Cork South Central, Fianna Fail)
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182. To ask the Minister for Finance if there are any initiatives to assist SMEs here struggling with currency fluctuations to avail of hedging services (details supplied); and if he will make a statement on the matter. [36100/16]

Michael Noonan (Limerick City, Fine Gael)
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As the Deputy will be aware, 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. 

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.

My Department will, of course, 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.

However, 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.  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. Indeed, as the deputy points out in the information supplied with his question, there are new entrants to the Irish market that are providing currency solutions for Irish businesses.