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Stormont facing a raft of questions on Brexit issue

By John Simpson

Published 02/08/2016

Complex negotiations lie ahead for Stormont
Complex negotiations lie ahead for Stormont

Brexit brings a large open-ended agenda to Stormont. Policies on employment law, farm income support, cross-border trade and electricity supplies are all needed. For Northern Ireland, the negotiations are complex. Initially, there is an important over-riding consideration. The UK is in a weak position in the negotiations with the EU. Having decided to leave, the EU stance is likely to be that the UK cannot expect major concessions to retain only the more acceptable features of EU membership: 'no cherry picking!'

Northern Ireland interests need to be carefully thought out, then related to the UK-wide negotiations and adapted for the all-Ireland dimensions. As the negotiations develop, they will test and amend the role of the devolved NI Executive. As EU policies and rules cease to apply, how will the UK administration adapt and in what circumstances does that affect devolution responsibilities?

High on the list of negotiation topics will be future external trade and payments arrangements.

UK (and NI) best interests would be to be allowed to retain the trading arrangements as if within the Single Market. If that is the ambition, the EU would set conditions, probably on free movement of labour, probably on a contribution to the EU budget and more extensively on the application of trade and competition policies. Each of these sets of conditions would cause UK hesitation. Any continuation of trade and competition policies could have particular impact for NI, if NI wishes to enhance the fiscal and monetary incentives to attract FDI investment.

For the Northern Ireland economy, the final shape of any deal on external trade in goods and services may be the most critical part of a Brexit deal. If, perchance, there is no deal retaining good access to the remaining EU countries, then the indirect cost of Brexit will be substantial.

If the deal is restrictive, then (as a fall back) a special NI-Ireland waiver might be sought.

The Brexit negotiations will be critical for trade and payments, but they will be extensive on other issues. There will be budget implications for NI as earmarked EU funds are no longer available. At the EU level, the ending of EU funding to the UK and/or NI will be a simple setting of the timetable. For NI, there are consequential issues in the reshaping of the UK budget as it affects devolution.

The most critical budget and policy issues will stem from the ending of EU funding for NI farming. Two related questions emerge: (i) is farming a devolved responsibility for Stormont and, if so, will the Stormont budget be increased to compensate for the ending of Single Farm Payments etc? and (ii) will Stormont be responsible for developing farm support policies in NI and how far will they be parity based (with London) or adapted to avoid cross-border (in Ireland) distortions?

Only if with optimistic views should it be assumed that farm incomes will emerge at no immediate disadvantage.

For the community and voluntary sectors, the Brexit negotiations will create considerable uncertainty. What arrangements, if any, at Stormont or from London will replace the EU funds under the several peace programmes or drawing on the EU Social and Regional Funds?

Then there are policy questions arising from Brexit. Will NI retain, or decide to continue, the EU legislation and rules emerging from the social chapter of the EU?

Will NI, in an all-island context, continue with the Single Electricity and Gas market arrangements? Will EU emissions policies cease to have local effect?

One final question: if Northern Ireland residents are permitted to hold Irish passports, can a Northern Irish resident use this privilege to benefit from the continuing EU rules on travel, work, migration, health treatment and university fees as an EU citizen? Will the Irish and UK governments quietly agree to this in a special protocol with the EU?

Will the Executive publish a consultation paper on these questions?

Company report: Charles Hurst Ltd

Charles Hurst Ltd is the largest local subsidiary of the Lookers plc group, which owns a number of subsidiary companies in Northern Ireland involved in the motor trade.

Business turnover at Charles Hurst increased appreciably in 2015, as it has done in each of the last five years. With turnover for the year 2015 exceeding £500m, Charles Hurst may be the largest motor vehicle dealer in Northern Ireland.

Charles Hurst, along with other similar businesses, traded through a shallow recession from 2007 to 2011, when year-by-year turnover fell in real terms - since when turnover has increased by just over 50%.

Operating profits in 2011 fell to nearly 1.2% of turnover. Profits then improved and recorded their best level in 2014 at over 2%, before a downward correction in 2015 to just over 1.6%. The recent fall in trading margins is attributed to the higher selling value of new and used cars, as well as increased price competition in the used car market.

A feature of the trading results is the level of inventories carried in the balance sheet. Inventories rose from £61m at the end of 2011 to nearly £99m in December 2015, an increase of 62% — slightly more than the increase in turnover.

In Northern Ireland, Charles Hurst operates from 11 separate locations and represents 16 car and two motorcycle franchises. In addition, they operate a dedicated van centre, four tyre outlets, and an accident repair centre. Contract hire business is handled by Fleet Financial ltd.

The average number of employees in the group, which had fallen in the recession years, increased to 1,014 during 2015. This was an increase of 9% in the last year.

The balance sheet value of shareholders’ funds fell from £47m at the end of 2007 to £42m a year later. Since then it has recovered steadily, year by year, to £58m in December 2015.

Belfast Telegraph

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