Business representative groups will be lobbying Government later this morning at the National Economic Dialogue to increase supports for indigenous companies in the Budget to offset the effects of Brexit. Research earlier this week from EY showed a worryingly low number of companies on both sides of the Irish border are making sufficient preparations - including currency hedging - ahead of the UK leaving the EU.
John Finn, managing director of Treasury Solutions - a company advises client companies on issues such as currency - said Irish companies are "getting there" when it comes to Brexit preparedness and there is a lot of Government assistance available. He said, by comparison, the UK government "is not providing the same level of support for their businesses" and around half of UK SME's "have no plan" for Brexit.
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Mr Finn said Irish businesses are "certainly ahead of the curve in what is available to us, but there is still some lagging in people engaging with the process". A recent recovery in the value of sterling against the euro is a welcome relief for Irish exporters, who have been struggling with currency volatility. The 'point of pain' for exporters - the euro-pound currency exchange rate at which profit is eroded for exporters - has risen from 85 pence to 89 pence in recent times.
John Finn said Irish firms "have been a bit more clinical and scientific" about the point of pain. "Even into the 90 pence range is where a lot of them are seeing where they can survive. But I guess the fact that we're here at 87-88 pence means we're in a better position than we were 12 months ago," he said. But he warned companies not to get complacent again. "Make sure that if you can make profit at these levels, then you should be setting your targets at these levels," he cautioned.
On the stabilisation of the pound, Mr Finn said the "range has tightened an awful lot in the past six to nine months. The average exchange rate between euro and sterling for the past ten months has continuously gotten slightly stronger, which is good news for exporters".
"However there is a lot of bad news in the euro zone now because we've got problems potentially in Italy, in Germany with a coalition - that wouldn't be good news for the euro - but we've still got this impending problem in the UK of the political fallout and whether they can reach an agreement," Mr Finn stated. "I would still be a little bit worried that we could get fallout either on the euro zone side or the sterling side - this could go either way.
With regard to currency hedging, Mr Finn said Irish companies are getting better at it. He pointed to plenty of State support in the education of companies with regard to currency hedging. The MD of Treasury Solutions also said his company is collaborating with four accountancy firms across the country to work with their clients to help up skill them in the area of dealing with banks. The new entity, Treasury Hub, will help companies in areas such as currency rates and borrowing.
MORNING BRIEFS - Business representative group Ibec has called on the Government to increase supports for indigenous business in the Budget. At the National Economic Dialogue, the group will ask Government to address competitive pressures, such as the threat of Brexit and staff recruitment and retention. The Small Firms Association also wants more support for smaller, homegrown companies, and is calling on Government to shift focus away from multinationals.
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