Business leaders express concerns over Brexit impact

Business in the province could be fundamentally affected by the Brexit process and household spending in Northern Ireland will be damaged by inflation linked to it senior business figures have warned a House of Lords inquiry.

By The Newsroom
Monday, 17th October 2016, 9:10 pm
Updated Tuesday, 25th October 2016, 3:37 pm
The dangers of Brexit for the province were spelled out during evidence to the House of Lords inquiry at Stormont
The dangers of Brexit for the province were spelled out during evidence to the House of Lords inquiry at Stormont

The concerns were expressed by new CBI director Angela McGowan and Declan Billington, chairman of the Northern Ireland Food and Drink Association both of whom gave evidence at St0rmont to the inquiry which is examining the impact of Brexit on UK-Ireland relations.

In one of her first major appearences on taking the CBI role economist Ms McGowan said manufacturers based in Northern Ireland could shift operations to the Republic to take advantage of freely available migrant labour, while levels of foreign direct investment could also suffer due to uncertainty created by the exit.

“I think it has the potential to hit all firms and all sectors really because what you are looking at is a blanket implication for access to skills, implications for overall demand within the economy and also as the economy slows the inflationary impact will hit household spending,” she said.

Food manufacturers, the hospitality industry and universities would also be negatively affected she said adding that access to migrant workers and the free flow of talent across borders was vital for manufacturers and pharmaceutical firms.

“Implications of the depreciated currency have a huge impact the manufacturing base,” she said.

It would also affect the logistics of how companies transported their goods or moved their workers.

The hospitality sector, farming and universities relied on migrant workers.

In addition, she said most of the insurance for the Northern Ireland market was underwritten from Dublin and she stressed also that the construction sector was particularly sensitive to business investment.

“There has always been a policy aim in Northern Ireland to attract FDI and it is not just about creating jobs for us, this is about creating companies which have high value added, which bring with them good management practice and say, for example, technology transfer.

“It also helps if we attract foreign direct investors to change the overall structure so we are not so dominant with small firms as well, to bring in those larger firms too.

“Investors seek stability - and obviously with Brexit, the macro-economic stability will not be there and we do think that will affect FDI.

“We do fear for FDI and our ability to attract it.”

Focusing on the agri-food industry, Mr Billington said interference in the employment market would be a “significant issue”.

Stating that 60% of workers in the industry fell into that category he told the committee firms had “exhausted the ability to get local labour into our processing facilities”.

“Any restrictions on access to labour could restrict our ability to stand still, never mind grow.,” he added.

It was “not unlikely,” he said, that businesses could relocate processing facilities across the Irish border where they would have free access to labour.

Mr Billington also warned that the food and drink industry could find itself exposed to extremely low cost competition in the wake of post-Brexit trade deals.

“Countries like Thailand and Brazil don’t have a living wage,” he said.

“Are we going to invite them into our markets and have them compete with industry we have layered policy costs on?

On a more positive note he said there were opportunities to be explored.

“We believe the industry can grow but it requires joined-up government and joined-up thinking.

“It can work but those negotiating need to have the knowledge of what the end game could be for agriculture.”