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Brace for no-deal Brexit, Northern Ireland firms are warned

Today’s much-changed skyline at Belfast harbour
Today’s much-changed skyline at Belfast harbour
Margaret Canning

By Margaret Canning

Northern Ireland businesses have been warned "brace yourself", as a no-deal Brexit looms large - with just 100 days to go until the UK leaves the European Union.

Confederation of British Industry NI director Angela McGowan warned that the uncertainty over Brexit was "throttling firms and threatening jobs".

And the Civil Service here confirmed that it's engaged in planning on a "reasonable worst case scenario" basis.

Meanwhile, the Cabinet has agreed to activate all of the Government's no-deal plans while it urged businesses to consider implementing their own contingency plans and said households should also make preparations for the March 29 exit.

Lorraine Nelson, tax manager at advisory firm Grant Thornton said some companies were now looking at saving money to pay for increased tariffs and regulatory requirements. Those added costs would apply if the UK leaves without a trade deal and resorts to World Trade Organisation rules.

Seamus Leheny

But she warned that only a minority of businesses are planning. "The majority have kicked the can down the road, thinking 'surely something will come through, something will happen'.

"But now that governments are pressing the button on their no-deal plans, that's a red light for business to do the same."

Seamus Leheny of the Freight Transport Association said a meeting in London today of the UK-wide haulage industry group would have a 'no-deal' agenda. "We can't sit any longer. We've tried until now to say there could be a deal. But we can't take the risk of thinking everything is fine then crash out on no-deal without anyone having done any preparations," he said.

"Here's what we're telling people - brace yourself. You need to do audits of your operations, your supply chains, your routes, and look not just at the Irish context of your cross-border operation, but also at your international operations."

Ms McGowan urged politicians to take responsibility for Brexit and conclude a deal as "companies and the country have had enough of chaos".

Theresa May held a Cabinet meeting in London yesterday to discuss the Brexit situation

"Uncertainty is throttling firms and threatening jobs - not in the future, but right now.

"We need to know for certain that a no-deal Brexit will not happen because until we receive assurances on that, damage to investment, jobs and future growth will continue.

"Over 85% of businesses and organisations surveyed in Northern Ireland have made their views clear: a backstop is better than a no-deal scenario."

NI Secretary of State Karen Bradley

Manufacturing NI chief Stephen Kelly noted how some members have already announced moves to open up in the EU.

Pharma giant Almac is opening a centre in Dundalk, while MJM marine outfitters is opening new offices in Poland.

Mr Kelly said: "When we surveyed members at the beginning of this year, 38% said they had plans to shift production out of the UK. This does not necessarily mean four out of 10 factories are to close, but it does mean NI and the UK is not viewed as a stable long-term investment location.

"With news today that the UK Cabinet are encouraging businesses to activate their contingency plans, we expect those who can, with the cash available, will make their move in the new year.

"All of this is deeply frustrating. Our manufacturing community has come through the financial crisis and rebuilt markets, their businesses and jobs. Many are angry that UK politics is getting in the way of them creating more wealth and work."

A spokeswoman for the Executive Office, which is in charge of the NI Civil Service, said that since the Chequers Deal was announced in July, "there has been a greater focus on no-deal planning across government, including the contingency plans that would be necessary in the event of a no-deal outcome".

"The Northern Ireland Civil Service has been engaged in this process and we have been developing plans on a 'reasonable worst case scenario' basis."

Farmers yesterday reiterated their warning that a no-deal Brexit would effectively mean the closure of export markets to farmers here - including important avenues such as the sale of lamb to France.

Ulster Farmers Union presdient Ivor Ferguson said: "A 'no-deal' Brexit is a very risky outcome and would have disastrous consequences for farming in Northern Ireland. Farmers would face up to 90% tariffs on exports and unfair competition in the UK market from lower standard food products imported from outside Europe."

No-deal Brexit: the key questions

What is no-deal Brexit?

On March 29 the UK would quit the EU without a withdrawal agreement with the European Union covering issues including the Irish border, expats’ rights in Europe or a future trade deal, among other things.

What will happen if Britain leaves the EU without a deal?

Either a cataclysm of biblical proportions or a minor hiccup on the path to self-determination, depending on your point of view.

Who is concerned?

Various industries from pharmaceuticals to farming, haulage to aircraft production have warned that dropping out would be catastrophic for business and jobs. There have also been warnings about consumer protection, food supply and safety, and availability of medicines.

Hang on, medicines?

Many drugs like insulin that are vital to Britons’ health are manufactured partly or entirely abroad, including in the EU. There have been warnings timely imports of perishable substances could be hindered by increased customs checks at British borders. Ministers are drawing up plans to fly in vital drugs and give priority to lorries carrying medical supplies at gridlocked ports.

What does the Government say?

Theresa May has used the prospect of a no-deal Brexit, and the damage it could cause, as a carrot/stick to convince sceptical MPs to back the withdrawal agreement in a vote. This follows more than 100 technical papers on no-deal planning released by departments in the summer.

Has it worked?

Not so far. The Government was forced to pull a vote planned for December 11 in the face of almost certain defeat. It has been rescheduled for mid-January, with critics suggesting that Downing Street hopes MPs might see the March leaving date approaching fast and cave in.

What has to happen to get us to that stage?

Not necessarily very much at all. If Theresa May’s hugely unpopular withdrawal agreement is voted down by MPs in January, and no consensus can be reached in the bitterly divided Commons on an alternative, no-deal would effectively become the default.

Can the effects be mitigated?

Some MPs, reportedly including Cabinet ministers, have suggested a “managed no-deal Brexit”, in which there is a two-year transition period after March 29 — as with the withdrawal agreement — which would give us more time to be ready to counter the negative impacts.

But not everyone thinks it would be disastrous?

No. Some Brexiteers argue that many of the warnings are overblown and part of “Project Fear” to either stop Brexit altogether or keep the UK in a closer relationship with the EU than they would like. Others simply think they are wrong and the UK could drop out of the EU and do global business on World Trade Organisation terms quite happily.

What do economists say?

Separate assessments from Whitehall and the Bank of England in November painted a grim picture of the impact of a no-deal Brexit on the UK economy. The Bank warned Britain could be tipped into a recession worse than the financial crash, with an 8% cut in GDP, unemployment surging by as much as 7.5% and house prices falling by almost one-third, while a cross-Government analysis found the UK economy would be 9.3% smaller after 15 years.

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