closer to hard border roi ni smes pessimistic about … · 2 days ago · roi 50% 18% ni positiv...
TRANSCRIPT
With Brexit potentially less than two years away, sentiment
among many SMEs in both the Republic of Ireland and
Northern Ireland points to a degree of uncertainty and
negativity as they prepare themselves for the future,
according to AIB’s inaugural Brexit Sentiment Index.
The Index reflects and measures the outlook of Irish SMEs towards Brexit,
summarised as a single number, with a potential range from +100 to -100.
AIB's Brexit Sentiment Index tracks SME business sentiment across the island of Ireland during Brexit negotiations.
-10
-20
-30
-40
-50
September 2017
June 2016
£1k =
€1,267£1k =
€1,116
Source: Ipsos MRBI
EXPECTATIONS REGARDING BORDER
MEZZANINE FINANCING
HARD BORDER
76%
24%
63%
37%
CLOSER TO WHAT WE HAVE NOW
ROI NI
AWARENESS OF TARIFFS
MEZZANINE FINANCING
YES
24%
11%
15%
16%
YES, BUT NEED MORE INFORMATION
ROI NI
MEZZANINE FINANCING
65%69%NO
% INCIDENCE OF EXPORTING / IMPORTING
Exporting
56%NI
22%ROI
AWARENESS OF TARIFFS THAT MIGHT IMPACT GOODS / SERVICES
ROI
OPPORTUNITIES FROM BREXIT
Yes20%
No80%
NI
Yes28%No
72%
ROI
Yes11%
No65%
NI
Yes, but need
more information
24%
Yes16%
Yes, but need
more information
15%
No69%
Source: Ipsos MRBI
Source: Ipsos MRBI
Source: Ipsos MRBI
Source:AIB
IMPACT OF BREXIT
Source: Ipsos MRBI
STERLING >> EURO EXCHANGE RATE
ROI UK/NI
Importing Exporting
30%
OTHER EU
33%NI
NI OTHER EU
Importing
+100-100
Most Optimistic /
Positive
Most Pessimistic /
Negative
0Neutral-41
(ROI)
-38(NI)
Source: Ipsos MRBI
IMPACT ON BUSINESS NOW
26%
8%
ROI
41%
9%
NI
Positive
Negative Negative
Positive
IMPACT ON FUTURE BUSINESS
54%
11%
ROI
50%
18%
NI
Positive
Negative Negative
Positive
BREXIT OPPORTUNITIES
Source: Ipsos MRBI
CURRENT IMPACT ON COST OF SALES
EXPANSION PLANS ON HOLD / POSTPONED / REVIEWED
28%ROI Yes 20%NI
Yes
ROI NI
Higher Lower Higher1%10% 15% 56%Lower
18%ROI 31%NI
INTERNATIONAL TRADE ACTIVITY
ROI SMEs
Source: Ipsos MRBI
20% Export to UK
NI SMEs
36%
51% Import from UK 52% Import from ROI/EU
Export to ROI/EU
AIB BREXIT SENTIMENT INDEX* (Q3 2017)
-10
-20
-30
-40
-50
September 2017
June 2016
£1k =
€1,267£1k =
€1,116
Source: Ipsos MRBI
EXPECTATIONS REGARDING BORDER
MEZZANINE FINANCING
HARD BORDER
76%
24%
63%
37%
CLOSER TO WHAT WE HAVE NOW
ROI NI
AWARENESS OF TARIFFS
MEZZANINE FINANCING
YES
24%
11%
15%
16%
YES, BUT NEED MORE INFORMATION
ROI NI
MEZZANINE FINANCING
65%69%NO
% INCIDENCE OF EXPORTING / IMPORTING
Exporting
56%NI
22%ROI
AWARENESS OF TARIFFS THAT MIGHT IMPACT GOODS / SERVICES
ROI
OPPORTUNITIES FROM BREXIT
Yes20%
No80%
NI
Yes28%No
72%
ROI
Yes11%
No65%
NI
Yes, but need
more information
24%
Yes16%
Yes, but need
more information
15%
No69%
Source: Ipsos MRBI
Source: Ipsos MRBI
Source: Ipsos MRBI
Source:AIB
IMPACT OF BREXIT
Source: Ipsos MRBI
STERLING >> EURO EXCHANGE RATE
ROI UK/NI
Importing Exporting
30%
OTHER EU
33%NI
NI OTHER EU
Importing
+100-100
Most Optimistic /
Positive
Most Pessimistic /
Negative
0Neutral-41
(ROI)
-38(NI)
Source: Ipsos MRBI
IMPACT ON BUSINESS NOW
26%
8%
ROI
41%
9%
NI
Positive
Negative Negative
Positive
IMPACT ON FUTURE BUSINESS
54%
11%
ROI
50%
18%
NI
Positive
Negative Negative
Positive
BREXIT OPPORTUNITIES
Source: Ipsos MRBI
CURRENT IMPACT ON COST OF SALES
EXPANSION PLANS ON HOLD / POSTPONED / REVIEWED
28%ROI Yes 20%NI
Yes
ROI NI
Higher Lower Higher1%10% 15% 56%Lower
18%ROI 31%NI
INTERNATIONAL TRADE ACTIVITY
ROI SMEs
Source: Ipsos MRBI
20% Export to UK
NI SMEs
36%
51% Import from UK 52% Import from ROI/EU
Export to ROI/EU
AIB BREXIT SENTIMENT INDEX* (Q3 2017)
-10
-20
-30
-40
-50
September 2017
June 2016
£1k =
€1,267£1k =
€1,116
Source: Ipsos MRBI
EXPECTATIONS REGARDING BORDER
MEZZANINE FINANCING
HARD BORDER
76%
24%
63%
37%
CLOSER TO WHAT WE HAVE NOW
ROI NI
AWARENESS OF TARIFFS
MEZZANINE FINANCING
YES
24%
11%
15%
16%
YES, BUT NEED MORE INFORMATION
ROI NI
MEZZANINE FINANCING
65%69%NO
% INCIDENCE OF EXPORTING / IMPORTING
Exporting
56%NI
22%ROI
AWARENESS OF TARIFFS THAT MIGHT IMPACT GOODS / SERVICES
ROI
OPPORTUNITIES FROM BREXIT
Yes20%
No80%
NI
Yes28%No
72%
ROI
Yes11%
No65%
NI
Yes, but need
more information
24%
Yes16%
Yes, but need
more information
15%
No69%
Source: Ipsos MRBI
Source: Ipsos MRBI
Source: Ipsos MRBI
Source:AIB
IMPACT OF BREXIT
Source: Ipsos MRBI
STERLING >> EURO EXCHANGE RATE
ROI UK/NI
Importing Exporting
30%
OTHER EU
33%NI
NI OTHER EU
Importing
+100-100
Most Optimistic /
Positive
Most Pessimistic /
Negative
0Neutral-41
(ROI)
-38(NI)
Source: Ipsos MRBI
IMPACT ON BUSINESS NOW
26%
8%
ROI
41%
9%
NI
Positive
Negative Negative
Positive
IMPACT ON FUTURE BUSINESS
54%
11%
ROI
50%
18%
NI
Positive
Negative Negative
Positive
BREXIT OPPORTUNITIES
Source: Ipsos MRBI
CURRENT IMPACT ON COST OF SALES
EXPANSION PLANS ON HOLD / POSTPONED / REVIEWED
28%ROI Yes 20%NI
Yes
ROI NI
Higher Lower Higher1%10% 15% 56%Lower
18%ROI 31%NI
INTERNATIONAL TRADE ACTIVITY
ROI SMEs
Source: Ipsos MRBI
20% Export to UK
NI SMEs
36%
51% Import from UK 52% Import from ROI/EU
Export to ROI/EU
AIB BREXIT SENTIMENT INDEX* (Q3 2017)SMEs PESSIMISTIC ABOUT BREXIT
*The Index reflects and measures the sentiment of Irish SMEs towards Brexit, summarised as a single number, with a potential range from +100 to -100. It takes the difference between the positive and negative responses across four key measures: Impact on business now, Impact on future business (next 5 years), Level of visibility and, finally, the Wider economic impact of Brexit.
fxcentre.aib.ie/brexit
BREXIT SENTIMENT INDEX
1 | November 2017 #backedbyAIB
-10
-20
-30
-40
-50
September 2017
June 2016
£1k =
€1,267£1k =
€1,116
Source: Ipsos MRBI
EXPECTATIONS REGARDING BORDER
MEZZANINE FINANCING
HARD BORDER
76%
24%
63%
37%
CLOSER TO WHAT WE HAVE NOW
ROI NI
AWARENESS OF TARIFFS
MEZZANINE FINANCING
YES
24%
11%
15%
16%
YES, BUT NEED MORE INFORMATION
ROI NI
MEZZANINE FINANCING
65%69%NO
% INCIDENCE OF EXPORTING / IMPORTING
Exporting
56%NI
22%ROI
AWARENESS OF TARIFFS THAT MIGHT IMPACT GOODS / SERVICES
ROI
OPPORTUNITIES FROM BREXIT
Yes20%
No80%
NI
Yes28%No
72%
ROI
Yes11%
No65%
NI
Yes, but need
more information
24%
Yes16%
Yes, but need
more information
15%
No69%
Source: Ipsos MRBI
Source: Ipsos MRBI
Source: Ipsos MRBI
Source:AIB
IMPACT OF BREXIT
Source: Ipsos MRBI
STERLING >> EURO EXCHANGE RATE
ROI UK/NI
Importing Exporting
30%
OTHER EU
33%NI
NI OTHER EU
Importing
+100-100
Most Optimistic /
Positive
Most Pessimistic /
Negative
0Neutral-41
(ROI)
-38(NI)
Source: Ipsos MRBI
IMPACT ON BUSINESS NOW
26%
8%
ROI
41%
9%
NI
Positive
Negative Negative
Positive
IMPACT ON FUTURE BUSINESS
54%
11%
ROI
50%
18%
NI
Positive
Negative Negative
Positive
BREXIT OPPORTUNITIES
Source: Ipsos MRBI
CURRENT IMPACT ON COST OF SALES
EXPANSION PLANS ON HOLD / POSTPONED / REVIEWED
28%ROI Yes 20%NI
Yes
ROI NI
Higher Lower Higher1%10% 15% 56%Lower
18%ROI 31%NI
INTERNATIONAL TRADE ACTIVITY
ROI SMEs
Source: Ipsos MRBI
20% Export to UK
NI SMEs
36%
51% Import from UK 52% Import from ROI/EU
Export to ROI/EU
AIB BREXIT SENTIMENT INDEX* (Q3 2017)
Due to the prevailing un-
certainty surrounding Brexit
on the economies of both the
Republic of Ireland and Northern
Ireland, the first wave of the AIB
research found that the overall
sentiment towards Brexit is
overwhelmingly negative. Of the
two jurisdictions, the negative
sentiment expressed by SMEs in
the Republic of Ireland was slightly ahead (-41)
of their counterparts in Northern Ireland (-38).
“The general sense among our SME
customers is that Brexit will have a negative
impact on both their business and the wider
economy and this is backed up by AIB’s Brexit
Sentiment Index,” says Catherine Moroney,
Head of Business Banking, AIB.
“While the impact is already being felt,
particularly by those invoicing in Sterling,
most businesses in the Republic of Ireland
believe that the greatest challenges lie
ahead. However, in Northern Ireland
the immediate impact appears greater, with
fewer concerned about the longer-term
impact,” she says.
When broken down amongst the four key
Index measures, SMEs in Northern Ireland
are already feeling Brexit’s impact, with as
many as 41% admitting that it’s having a
negative impact compared to 26% in the
Republic of Ireland.
As SMEs in Northern Ireland
are more negatively impacted
by Sterling’s recent fluctuations,
their challenges are a lot more
immediate and tangible. Indeed
currency fluctuations over the
last 12 months combined with
increased costs, a decrease in
consumer confidence and general
uncertainty were cited by 27% of
respondents as the main reasons
why Brexit is already having a
negative impact on their businesses.
“Currency fluctuations continue
to be a key and immediate concern
for SMEs that export or import.
Increased volatility in Sterling is
impacting SMEs across the island
of Ireland,” says Tom Hall, Head of
Treasury Sales, AIB.
“This research tells us that Republic of Ireland
based exporters and Northern Ireland based
importers have seen their margins contract
materially as the value of Sterling has depreciated.
What hasn’t been as widely reported, and comes
out strongly from our research, is the very large
cohort of ROI SMEs that, as importers, have
benefited significantly from the strengthening
Euro. Whether these gains can offset the rising
costs from the increased friction in trade with the
UK remains to be seen.”
“Our guidance to SMEs remains consistent.
Businesses should analyse their supply chain
looking for opportunities to lessen currency
exposures where possible. We encourage SMEs
to consider using forward FX contracts to lock in
exchange rates for some of their payables and
receivables, thereby reducing potential shocks to
cash flow. Most importantly, we want to support
our customers. If you need help, please talk to us.”
SMEs in Northern Ireland have also seen
a reduction in their sales over the last 12
months with as many as 21% of
firms reporting a decline. Sectors
most exposed are Retail and
Manufacturing, with 24% and
26% respectively, reporting a dip
in their sales. By comparison,
just 12% of SMEs operating in the
Republic of Ireland have reported
a decline in sales, with no impact
for most firms (82%).
Catherine Moroney, Head of Business Banking, AIB
Tom Hall, Head of Customer Treasury Services, AIB.
fxcentre.aib.ie/brexit
BREXIT SENTIMENT INDEX
2 | November 2017 #backedbyAIB
VICKI O’TOOLE, J.J. O’TOOLE, LIMERICKAs the leading supplier of bespoke
packaging in Ireland, Limerick-based
J.J. O’Toole is watching the unfolding
Brexit negotiations with keen interest.
With 15% of its turnover exported and
approximately 3% of this going to Northern Ireland
and the UK, where it has developed a growing
blue-chip client base, the company’s managing
director Vicki O’Toole says that planning for Brexit
can be difficult, given the prevailing uncertainty.
“It is very difficult for us to mitigate against
the risks of Brexit when it seems that no one
really knows what those risks will be or when
they will happen. When we don’t know what
the challenges are, it’s hard to plan ahead.
So, with all the uncertainties and currency
volatilities, the stance we are taking is not
to panic but ensure that we are keeping up
to speed with latest news and analysis.”
Depending on the outcome of the ongoing
Brexit negotiations, the company may
set up a subsidiary in the UK to manage
its client-base there while other export
markets are also being explored.
"Whilst this may provide some regulatory
cover, it will not cover the potential risks of
currency volatility. In this regard, we have
had recent experience of quoting a major UK
customer in US dollars, the preferred currency
of many of our Asian partners. However, with
all the unpredictability at the moment, we are
now also looking at the possibility of delving
into other international markets,” says Vicki.
While the possible introduction of tariffs
is a concern for the company, she adds
that it’s important not to underestimate the
relationships it has built up with clients.
“I do believe that we should not forget the
importance of our relationships with our existing
and future clientele in the UK. We are the
preferred packaging partners to clients in the UK,
not just because we are competitive. Business is
forged on good relationships and trust between
companies as well as quality product and excellent
service levels. Therefore, we must continue to
provide a superior offering to our clients to ensure
the positives outweigh the negatives,” she says. ■
CUSTOMER VIEW
Not surprisingly, a weaker Sterling over the last
12 months is also impacting on the cost of sales
for firms located in both jurisdictions, although
the impact is being more widely felt in Northern
Ireland where 56% of SMEs have seen cost of
sales increase compared to just 10% in the
Republic of Ireland.
The research also shows that SMEs in the
Republic of Ireland are slightly more pessimistic
than their counterparts across the Border
when it comes to the impact of Brexit on their
future. Some 54% of SMEs in the Republic of
Ireland believe that it will have a negative
impact compared to 50% in
Northern Ireland.
“This piece of research
commissioned by AIB shows
the high level of uncertainty
of businesses in the Island
of Ireland. As the Brexit
negotiations evolve, and as the
future trade regime between
EU and UK, and the transition
become clearer, businesses will have to plan
in order to limit inevitable negative impacts.
Even the best Brexit agreement will result in
more controls, hence frictions, hence costs,
for both sides,” says Pascal Lamy, President
Emeritus of the Jacques Delors Institute and
former Director-General of the World Trade
Organisation (WTO).
Research also reveals that most SMEs believe
that, post-Brexit, any Border that might be
implemented will be closer to the one that is
currently in operation. Only 37% of SMEs in
the Republic of Ireland and 24% in Northern
Ireland believe there will be a “hard border.”
As the finer details of the UK’s exit from
the EU have yet to be agreed, the AIB Brexit
Sentiment Index shows that this is also having
an impact on SME’s ability to plan for their
future, with some 57% of SMEs in the Republic
of Ireland and 67% in Northern
Ireland admitting that visibility
was “very limited” while 31%
and 20% admitted it was limited.
A lack of visibility can also
influence a company’s ability
to plan for the future and the
research shows that 18% of
SMEs in the Republic of Ireland
and 31% in Northern Ireland
have either reviewed, cancelled or postponed
future expansion and investment plans.
This lack of visibility is also impacting on the
SMEs' ability to develop a strategy to deal with
any tariffs that might arise post-Brexit. Some
69% of SMEs in the Republic of Ireland and
-10
-20
-30
-40
-50
September 2017
June 2016
£1k =
€1,267£1k =
€1,116
Source: Ipsos MRBI
EXPECTATIONS REGARDING BORDER
MEZZANINE FINANCING
HARD BORDER
76%
24%
63%
37%
CLOSER TO WHAT WE HAVE NOW
ROI NI
AWARENESS OF TARIFFS
MEZZANINE FINANCING
YES
24%
11%
15%
16%
YES, BUT NEED MORE INFORMATION
ROI NI
MEZZANINE FINANCING
65%69%NO
% INCIDENCE OF EXPORTING / IMPORTING
Exporting
56%NI
22%ROI
AWARENESS OF TARIFFS THAT MIGHT IMPACT GOODS / SERVICES
ROI
OPPORTUNITIES FROM BREXIT
Yes20%
No80%
NI
Yes28%No
72%
ROI
Yes11%
No65%
NI
Yes, but need
more information
24%
Yes16%
Yes, but need
more information
15%
No69%
Source: Ipsos MRBI
Source: Ipsos MRBI
Source: Ipsos MRBI
Source:AIB
IMPACT OF BREXIT
Source: Ipsos MRBI
STERLING >> EURO EXCHANGE RATE
ROI UK/NI
Importing Exporting
30%
OTHER EU
33%NI
NI OTHER EU
Importing
+100-100
Most Optimistic /
Positive
Most Pessimistic /
Negative
0Neutral-41
(ROI)
-38(NI)
Source: Ipsos MRBI
IMPACT ON BUSINESS NOW
26%
8%
ROI
41%
9%
NI
Positive
Negative Negative
Positive
IMPACT ON FUTURE BUSINESS
54%
11%
ROI
50%
18%
NI
Positive
Negative Negative
Positive
BREXIT OPPORTUNITIES
Source: Ipsos MRBI
CURRENT IMPACT ON COST OF SALES
EXPANSION PLANS ON HOLD / POSTPONED / REVIEWED
28%ROI Yes 20%NI
Yes
ROI NI
Higher Lower Higher1%10% 15% 56%Lower
18%ROI 31%NI
INTERNATIONAL TRADE ACTIVITY
ROI SMEs
Source: Ipsos MRBI
20% Export to UK
NI SMEs
36%
51% Import from UK 52% Import from ROI/EU
Export to ROI/EU
AIB BREXIT SENTIMENT INDEX* (Q3 2017)
Pascal Lamy, President Emeritus of the Jacques Delors Institute
and former DG of the WTO.
-10
-20
-30
-40
-50
September 2017
June 2016
£1k =
€1,267£1k =
€1,116
Source: Ipsos MRBI
EXPECTATIONS REGARDING BORDER
MEZZANINE FINANCING
HARD BORDER
76%
24%
63%
37%
CLOSER TO WHAT WE HAVE NOW
ROI NI
AWARENESS OF TARIFFS
MEZZANINE FINANCING
YES
24%
11%
15%
16%
YES, BUT NEED MORE INFORMATION
ROI NI
MEZZANINE FINANCING
65%69%NO
% INCIDENCE OF EXPORTING / IMPORTING
Exporting
56%NI
22%ROI
AWARENESS OF TARIFFS THAT MIGHT IMPACT GOODS / SERVICES
ROI
OPPORTUNITIES FROM BREXIT
Yes20%
No80%
NI
Yes28%No
72%
ROI
Yes11%
No65%
NI
Yes, but need
more information
24%
Yes16%
Yes, but need
more information
15%
No69%
Source: Ipsos MRBI
Source: Ipsos MRBI
Source: Ipsos MRBI
Source:AIB
IMPACT OF BREXIT
Source: Ipsos MRBI
STERLING >> EURO EXCHANGE RATE
ROI UK/NI
Importing Exporting
30%
OTHER EU
33%NI
NI OTHER EU
Importing
+100-100
Most Optimistic /
Positive
Most Pessimistic /
Negative
0Neutral-41
(ROI)
-38(NI)
Source: Ipsos MRBI
IMPACT ON BUSINESS NOW
26%
8%
ROI
41%
9%
NI
Positive
Negative Negative
Positive
IMPACT ON FUTURE BUSINESS
54%
11%
ROI
50%
18%
NI
Positive
Negative Negative
Positive
BREXIT OPPORTUNITIES
Source: Ipsos MRBI
CURRENT IMPACT ON COST OF SALES
EXPANSION PLANS ON HOLD / POSTPONED / REVIEWED
28%ROI Yes 20%NI
Yes
ROI NI
Higher Lower Higher1%10% 15% 56%Lower
18%ROI 31%NI
INTERNATIONAL TRADE ACTIVITY
ROI SMEs
Source: Ipsos MRBI
20% Export to UK
NI SMEs
36%
51% Import from UK 52% Import from ROI/EU
Export to ROI/EU
AIB BREXIT SENTIMENT INDEX* (Q3 2017)
CUSTOMER VIEW PETER McALLISTERMCALLISTER GROUP, NEWRYWith nearly 100 staff and a client base
in Northern Ireland, England and the Republic
of Ireland, the 46-year old Newry-
headquartered McAllister Group has carved
out an important niche as a leading supplier
of trenchless technology services and
environmental solutions. The family-owned
company boasts a blue-chip client list which
includes leading utility and transport companies
like NI Water, Irish Water, Thames Water,
Southern Water, Translink, Transport NI,
Network Rail and London Underground.
According to managing director, Peter
McAllister, the 2016 Brexit vote had an almost
immediate impact on the business as Sterling
started to decline against the Euro.
“We source a lot of our equipment within the
EU, particularly Germany, and once Sterling
started to weaken, it had an immediate impact
as buying equipment became nearly 20% more
expensive. We had to look at our own costs and
try and build them into our pricing. So, you could
say that we are dealing with Brexit on a day-to-
day basis.” he says.
“But it has been business as usual for us, even
though the currency fluctuations haven’t been
helpful. You can’t stand still in this business
and Brexit hasn’t stopped our work plans and
nor has it stopped our growth plans. We will
continue to work in the UK, particularly in the
Greater London area as this has become an
important growth market. But we can’t let Brexit
hold us back,” he adds.
He points out that some 45% of the company’s
turnover is generated in the important UK
market. Another 40% is derived in Northern
Ireland while the remaining 15% comes from the
Republic of Ireland.
“We will continue to keep an eye on the market
in the Republic of Ireland where we already have
clients and it’s possible that we might set up a
company there in the future." he says.
“But we also have experience in other markets
and for a while we were in the Middle East
but we took a decision to focus on our London
operation which was growing. But we are not
adverse at looking at other markets in the future.
Our services are movable services and our
business is movable business.” says Peter. ■
fxcentre.aib.ie/brexit
BREXIT SENTIMENT INDEX
3 | November 2017 #backedbyAIB
-10
-20
-30
-40
-50
September 2017
June 2016
£1k =
€1,267£1k =
€1,116
Source: Ipsos MRBI
EXPECTATIONS REGARDING BORDER
MEZZANINE FINANCING
HARD BORDER
76%
24%
63%
37%
CLOSER TO WHAT WE HAVE NOW
ROI NI
AWARENESS OF TARIFFS
MEZZANINE FINANCING
YES
24%
11%
15%
16%
YES, BUT NEED MORE INFORMATION
ROI NI
MEZZANINE FINANCING
65%69%NO
% INCIDENCE OF EXPORTING / IMPORTING
Exporting
56%NI
22%ROI
AWARENESS OF TARIFFS THAT MIGHT IMPACT GOODS / SERVICES
ROI
OPPORTUNITIES FROM BREXIT
Yes20%
No80%
NI
Yes28%No
72%
ROI
Yes11%
No65%
NI
Yes, but need
more information
24%
Yes16%
Yes, but need
more information
15%
No69%
Source: Ipsos MRBI
Source: Ipsos MRBI
Source: Ipsos MRBI
Source:AIB
IMPACT OF BREXIT
Source: Ipsos MRBI
STERLING >> EURO EXCHANGE RATE
ROI UK/NI
Importing Exporting
30%
OTHER EU
33%NI
NI OTHER EU
Importing
+100-100
Most Optimistic /
Positive
Most Pessimistic /
Negative
0Neutral-41
(ROI)
-38(NI)
Source: Ipsos MRBI
IMPACT ON BUSINESS NOW
26%
8%
ROI
41%
9%
NI
Positive
Negative Negative
Positive
IMPACT ON FUTURE BUSINESS
54%
11%
ROI
50%
18%
NI
Positive
Negative Negative
Positive
BREXIT OPPORTUNITIES
Source: Ipsos MRBI
CURRENT IMPACT ON COST OF SALES
EXPANSION PLANS ON HOLD / POSTPONED / REVIEWED
28%ROI Yes 20%NI
Yes
ROI NI
Higher Lower Higher1%10% 15% 56%Lower
18%ROI 31%NI
INTERNATIONAL TRADE ACTIVITY
ROI SMEs
Source: Ipsos MRBI
20% Export to UK
NI SMEs
36%
51% Import from UK 52% Import from ROI/EU
Export to ROI/EU
AIB BREXIT SENTIMENT INDEX* (Q3 2017)
65% in Northern Ireland have no awareness of
tariffs and the implications they might have on
their businesses. However, even for those who
had some awareness of tariffs, many admitted
it was limited, with 15% of SMEs in the Republic
of Ireland and 24% in Northern Ireland saying
they needed more information.
When it comes to the final of the four inputs
that make up the Index – Brexit’s wider economic
impact - SMEs in the Republic of Ireland are
also a lot more pessimistic, with 71% of those
surveyed admitting that it will have a negative
economic impact, compared to 55% of SMEs
in Northern Ireland. Every sector within both
economies will be directly impacted by Brexit,
according to the research.
Some 34% of SMEs in the Tourism &
Hospitality sector say Brexit is already
negatively impacting their businesses as
the number of UK tourists visiting Ireland
continues to decline. A further 67% say that
it will continue to have a negative impact in
the future while 74% say it will have wider
economic implications over the longer term.
Overall, the Tourism & Hospitality sector
in the Republic of Ireland registered -51
on the Brexit Sentiment Index, making it the
most downbeat of all the sectors, including Retail
(-41), Manufacturing (-40), Food & Drink (-35),
Professional Services (-31), Technology, Media &
Telecoms (-38) and Transport & Logistics (-41).
By comparison, Northern Ireland’s Tourism
& Hospitality sector registered -31 on the
Index after a greater degree of optimism was
expressed as occupancy rates remain steady
and the weakness in Sterling is attracting more
visitors. However, the Retail sector registered
-48 on the Index with many retailers already
feeling challenged by Sterling’s volatility.
While the overall sentiment registered
is largely negative given the uncertainty
and disruption that will be caused to exporters
and importers, it shows that some SMEs are
also positive about the opportunities that may
arise. This is stronger in the Republic of Ireland
where over a quarter of SMEs see opportunities
arising from Brexit. This is highest among
businesses in Dublin.
In Northern Ireland, meanwhile, 20% of SMEs
see opportunities arising out of Brexit with
Tourism, in particular, standing out.
With uncertainty and adverse currency
fluctuations surfacing as the dominant themes
throughout the Brexit Sentiment Index,
it is imperative that companies start to plan
their future.
“Planning is made easier in times of certainty.
However, in times of uncertainty it is critical.
AIB is encouraging businesses to seek good
advice and plan for the worst-case scenario.
AIB has 21 Brexit Advisors nationwide
who are there to support our customers in
understanding how Brexit may impact their
business. They are available to meet with
customers to discuss potential implications and
examine the ways in which AIB can provide
support in planning for Brexit. Armed with
a plan, AIB can discuss how we can support
their financial needs whether that is increased
working capital, funding for new capital
expenditure or development of new routes
to market. Whatever the final outcome, the
business will be better positioned for the future,”
Catherine concludes. ■
-10
-20
-30
-40
-50
September 2017
June 2016
£1k =
€1,267£1k =
€1,116
Source: Ipsos MRBI
EXPECTATIONS REGARDING BORDER
MEZZANINE FINANCING
HARD BORDER
76%
24%
63%
37%
CLOSER TO WHAT WE HAVE NOW
ROI NI
AWARENESS OF TARIFFS
MEZZANINE FINANCING
YES
24%
11%
15%
16%
YES, BUT NEED MORE INFORMATION
ROI NI
MEZZANINE FINANCING
65%69%NO
% INCIDENCE OF EXPORTING / IMPORTING
Exporting
56%NI
22%ROI
AWARENESS OF TARIFFS THAT MIGHT IMPACT GOODS / SERVICES
ROI
OPPORTUNITIES FROM BREXIT
Yes20%
No80%
NI
Yes28%No
72%
ROI
Yes11%
No65%
NI
Yes, but need
more information
24%
Yes16%
Yes, but need
more information
15%
No69%
Source: Ipsos MRBI
Source: Ipsos MRBI
Source: Ipsos MRBI
Source:AIB
IMPACT OF BREXIT
Source: Ipsos MRBI
STERLING >> EURO EXCHANGE RATE
ROI UK/NI
Importing Exporting
30%
OTHER EU
33%NI
NI OTHER EU
Importing
+100-100
Most Optimistic /
Positive
Most Pessimistic /
Negative
0Neutral-41
(ROI)
-38(NI)
Source: Ipsos MRBI
IMPACT ON BUSINESS NOW
26%
8%
ROI
41%
9%
NI
Positive
Negative Negative
Positive
IMPACT ON FUTURE BUSINESS
54%
11%
ROI
50%
18%
NI
Positive
Negative Negative
Positive
BREXIT OPPORTUNITIES
Source: Ipsos MRBI
CURRENT IMPACT ON COST OF SALES
EXPANSION PLANS ON HOLD / POSTPONED / REVIEWED
28%ROI Yes 20%NI
Yes
ROI NI
Higher Lower Higher1%10% 15% 56%Lower
18%ROI 31%NI
INTERNATIONAL TRADE ACTIVITY
ROI SMEs
Source: Ipsos MRBI
20% Export to UK
NI SMEs
36%
51% Import from UK 52% Import from ROI/EU
Export to ROI/EU
AIB BREXIT SENTIMENT INDEX* (Q3 2017)
As the Brexit Sentiment Index
shows, SMEs operating in
Northern Ireland have already
begun to feel the impact of
Brexit on their businesses
with 41% of SMEs reporting
that it has had a negative
impact to date.
Sterling’s weakness against
the Euro, increased costs and a dip in consumer
confidence have all conspired to make the
business landscape a lot more challenging.
“The negative impact from Brexit is already being
acutely felt by SMEs in Northern Ireland, particularly
among retailers and larger businesses, as cost inflation
takes hold and squeezes the consumer. Sales are
down with 21% of Northern Ireland SMEs reporting
lower revenue as a result of Brexit. Investment and
expansion plans have also been hampered, with 1
in 3 NI SMEs having reviewed,
postponed or stopped their
existing plans,” says Brian Gillan,
Head of Business Banking,
First Trust Bank.
He points out that the sentiment expressed by the
Tourism sector in Northern Ireland is noteworthy.
“Not unexpectedly, the optimism and buoyancy
of the Tourism & Hospitality sector stands out.
Continued growth in occupancy, room rate and
REVPAR has been underpinned with a weaker GBP
FX rate which is attracting more international visitors
as well as from the Republic of Ireland,” he says.
“Perhaps more of a surprise in the Index is
the stark contrast of sentiment between Northern
Ireland and the Republic of Ireland, with the impact
of higher input cost inflation in NI far outweighing the
potential export growth opportunity. A higher number
of larger NI businesses, with 20 or more employees,
are exporting with 36% of NI businesses considering
themselves exporters which was surprisingly higher
than ROI's 22%,” says Brian.
Despite the existing and immediate impacts now
evident in NI, a very small number of businesses have a
plan in place to address the potential impacts of Brexit.
It's now more important than ever that NI businesses
engage to develop plans which will not only help
them to absorb and mitigate Brexit impacts but also
identify and avail of any potential opportunities. ■
THE NORTHERN IRELAND PERSPECTIVE
Brian Gillan, Head of Business Banking, First Trust Bank.
The AIB Brexit Sentiment Index is based on detailed telephone interviews conducted by Ipsos MRBI from its call centres in Dublin and Belfast amongst 500 SMEs in the Republic of Ireland and 200 in Northern Ireland, operating in a number of key defined sectors.
BREXIT SENTIMENT INDEX
fxcentre.aib.ie/brexit 4 | November 2017 #backedbyAIB Allied Irish Banks, p.l.c. is regulated by the Central Bank of Ireland
The AIB Brexit Sentiment Index is based on detailed telephone interviews conducted by Ipsos MRBI from its call centres in Dublin and Belfast amongst 500 SMEs in the Republic of Ireland and 200 in Northern Ireland, operating in a number of key defined sectors.
HOW CAN WE HELP?
AIB, Republic of Ireland Visit your local AIB branch or 1890 47 88 33
(8am - 9pm weekdays, 9am - 6pm Saturdays)
First Trust, Northern Ireland Brian Gillan, Head of Business Banking [email protected] 028 904 79206