Brexit: Shock awaiting Irish firms ‘like nothing ever experienced’

The shock awaiting Irish companies in the event of a no-deal Brexit “will be like nothing ever experienced before”, Siptu has warned.

Questioning whether the Government’s contingency plan goes far enough to protect small and medium-sized businesses, the trade union said the State must be prepared to force lenders to step in and help SMEs in the event of a disorderly Brexit.

"The Department of Finance needs to ensure that there will be a co-ordinated and consistent response by the main retail banks to businesses experiencing the impact of Brexit. That the Government has sought assurances from the banks simply does not go far enough," said Siptu's head of policy Marie Sherlock.

She said while there may be concern that forcing lenders to support businesses will delay plans to return the country’s three main banks to full private ownership, Ms Sherlock said such moves should be put on hold “for the greater need of the Irish economy”.

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The call comes amid concerns from Siptu members that there is insufficient support for companies who face liquidity issues should a no-deal Brexit take place.

The overriding purpose must be to introduce a degree of flexibility for companies to survive the initial shock

Siptu is calling on Minister of Finance Paschal Donohoe to set out a code of conduct with the banks to provide for emergency bridging finance at reduced rates and flexibility on debt redemptions for a defined period in order to save jobs and protect income.

Larger companies

“Larger companies may well have the benefit of an internal treasury, significant cash holdings or access to working capital from abroad. For smaller companies, that cushion will be largely non-existent. This is where the role played by the banks will be vital,” said Ms Sherlock.

“Safeguards can be worked out to prevent abuse but the overriding purpose must be to introduce a degree of flexibility for companies to survive the initial shock. That this support is provided at a reduced fee is very important – the prospect of our banking sector generating additional profits off the back of a crisis among importing and exporting businesses would be the ultimate irony,” she added.