The Salzburg summit has brought up the risk of a no-deal Brexit to the forefront of business minds, according Carol Lynch, partner in the BDO Customes and International Trade Services department.
BDO Quarterly Optimism Index found that 88% of Irish businesses do not believe a deal will be struck between the EU and Britain by the October deadline.
In Salzburg last week, President of the European Council, Donald Tusk, said that the Chequers agreement was not acceptable as it would impact on the single market. He said the negotiations on Northern Ireland had not progressed sufficiently, and a resolutions needs to be achieved by October, at least for the most part before a November summit.
"In trying to achieve a solution to Northern Ireland, you are really looking at trying to achieve a political solution," Ms Lynch explained. "From a trade perspective, once you have an EU and a non-EU country side by side, there is a requirement for border controls, import declarations, export declarations, so that's what we are going to see in Dublin Port and Holyhead for example. If we look at Northern Ireland, in order to overcome the political side of the problems and the impact on the Good Friday Agreement, both sides really have to come up with a political solution that makes the border controls a lot less visible."
Ms Lynch said trade happens every day between Ireland and non-EU countries. Ireland grows its exports based on exporting outside the EU. "We are encouraged all the time to develop business in that way, so trading with the UK as a non-EU country, while it brings additional complications, it's not impossible," she said. "Trade is not really the problem here in so far as there are solutions from a techinical perspective to that. It's really the political problem and the visibility of any controls is going to be the problem."
According to the BDO Optimism Index, optimism levels among Irish businesses for the rest of the year are the highest levels they have been since the index began 7 years. There is strong growth in the indigenous economy, with low interest rates, stable employment levels and extremely good activity. "The optimism in terms of exports is a little bit lower than the indigenous economy, and they are certainly a concern as to how that's going to impact in March next year. While we have an extremely strong economy on the indigenous side," Ms Lynch said, "it's the export side that is a little bit more concerning, and they are trying to work out how they are going to plan ahead for Brexit."
Businesses are preparing for Brexit by looking at their supply chain. "You are trying to see who you buy from in the UK; who you sell to in the UK? What are the potential costs of tariffs? Can you change your trade arrangements? How are you importing and are there alternative routes?"
Irish companies are also looking at stockpiling goods in warehouses in the UK. "We find our clients in Ireland are looking at warehousing space here which is quite difficult to get because there is very little of it."