0 +100 brexit continues to weigh on …...irish smes towards brexit, summarised as a single number,...
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fxcentre.aib.ie/brexit
BREXIT SENTIMENT INDEX
1 | February 2018 #backedbyAIB
SMEs in the Republic of Ireland
and Northern Ireland remain
negative about Brexit, while the
majority of them have no plans in
place to deal with it. In addition,
Brexit is negatively influencing their plans to
invest in and expand their business, although
23% of exporters in the ROI and 15% in NI are
already looking to expand into new European
markets, according to the latest AIB Brexit
Sentiment Index.
For Q4 of 2017, the Brexit Sentiment Index
registered a score of -36 for both the Republic
and North of Ireland. While this is a slight
improvement on -41 for the ROI that was
registered in Q3 of 2017 and -38 for NI, it is clear
that SMEs are still broadly negative about the
current impact of Brexit.
The research for the AIB Brexit Sentiment Index,
which was carried out by Ipsos MRBI, shows that
certain sectors are more negative than others.
In the ROI, for example, the Manufacturing (-49)
and Hospitality & Tourism (-40) sectors are the
most negative about Brexit. In NI, the Retail (-45)
and Hospitality & Tourism (-34) sectors continue
to be the most downbeat.
“As the reality of Brexit is landing with Irish SMEs,
the second wave of AIB’s Brexit Sentiment Index
indicates that while overall sentiment in the ROI
has improved by five points, more SMEs now feel
that Brexit will have a negative impact on their
business in the future. Across SMEs, most sectors
in this survey report that they are experiencing
With Brexit a little over a year away, AIB's Brexit Sentiment Index shows that SMEs in the Republic of Ireland and Northern Ireland still face considerable challenges.
BREXIT CONTINUES TO WEIGH ON BUSINESS SENTIMENT
*The Index reflects and measures the sentiment of Irish SMEs towards Brexit, summarised as a single number, with a potential range from +100 to -100. It takes the difference between the positive and negative responses across four key measures: Impact on business now, Impact on future business (next 5 years), Level of visibility and, finally, the Wider economic impact of Brexit.
-10
-20
Source: Ipsos MRBI
SMEs WITH INVESTMENT / EXPANSION PLANS (%)
UNDER REVIEW
51%
13%
24%
28%
POSTPONE / CANCEL
SMEs NOT PREPARED FOR BREXIT
ROI NI
Formal Plan6%
Investigations Started37%
Not Planning
Yet57%
Source: Ipsos MRBI
EXPORTERS LOOK TO NEW MARKETS
Source: Ipsos MRBI
+100-100
Most Optimistic /
Positive
Most Pessimistic /
Negative
0Neutral-36 (ROI)
-36 (NI)
AIB BREXIT SENTIMENT INDEX* (Q4 2017)
36%48% NO CHANGE TO PLANS
36%
Formal Plan2%
Investigations Started36%
Not Planning
Yet62%
CURRENT IMPACT ON COST OF SALES
9%
10%
ROI
LOW
ER
Source: Ipsos MRBI
HIG
HER
1%
62%
NI
LOW
ER
HIG
HER
23%ROI exporters
considering new markets
BREXIT’S IMPACT ON SMEs NOW
NIROI
Source: Ipsos MRBI
AdverseCurrency
Fluctuations
Less Competitive
Consumer Con�dence
AdverseCurrency
Fluctuations
Less Competitive
Consumer Con�dence41%
Neutral 71%
IMPACT ON BUSINESS NOW
ROI NI
IMPACT ON FUTURE BUSINESS
ROI NI
21% 41% 59% 63%
Positive
Negative Negative
Positive Positive
Negative Negative
Positive
8% 22%Q4
9%Q4
10%Q4 Q4
Q4 Q4 Q4 Q4
8%Q3
9%Q3
11%Q3
18%Q3
26%Q3
41%Q3
54%Q3
50%Q3
15%NI exporters
considering new markets
TOP 3 MARKETS BEING EXPLORED
TOP 3 MARKETS BEING EXPLORED
ROI SMEs had plans to invest
or expand pre-Brexit
44%NI SMEs
had plans to invest or expand pre-Brexit
IMPACT OF BREXITOn Investment & Expansion Plans
ROI NI
Source: Ipsos MRBI
Source: Ipsos MRBI -41 (ROI) -38 (NI)
AIB BREXIT SENTIMENT INDEX* (Q3 2017)
Germany
France
Other Europe
Republic of Ireland
Other Europe
North America
Positive 8%
Other
Neutral50%
Other
Positive 9%21% Negative
Negative
-10
-20
Source: Ipsos MRBI
SMEs WITH INVESTMENT / EXPANSION PLANS (%)
UNDER REVIEW
51%
13%
24%
28%
POSTPONE / CANCEL
SMEs NOT PREPARED FOR BREXIT
ROI NI
Formal Plan6%
Investigations Started37%
Not Planning
Yet57%
Source: Ipsos MRBI
EXPORTERS LOOK TO NEW MARKETS
Source: Ipsos MRBI
+100-100
Most Optimistic /
Positive
Most Pessimistic /
Negative
0Neutral-36 (ROI)
-36 (NI)
AIB BREXIT SENTIMENT INDEX* (Q4 2017)
36%48% NO CHANGE TO PLANS
36%
Formal Plan2%
Investigations Started36%
Not Planning
Yet62%
CURRENT IMPACT ON COST OF SALES
9%
10%
ROI
LOW
ER
Source: Ipsos MRBI
HIG
HER
1%
62%
NI
LOW
ER
HIG
HER
23%ROI exporters
considering new markets
BREXIT’S IMPACT ON SMEs NOW
NIROI
Source: Ipsos MRBI
AdverseCurrency
Fluctuations
Less Competitive
Consumer Con�dence
AdverseCurrency
Fluctuations
Less Competitive
Consumer Con�dence41%
Neutral 71%
IMPACT ON BUSINESS NOW
ROI NI
IMPACT ON FUTURE BUSINESS
ROI NI
21% 41% 59% 63%
Positive
Negative Negative
Positive Positive
Negative Negative
Positive
8% 22%Q4
9%Q4
10%Q4 Q4
Q4 Q4 Q4 Q4
8%Q3
9%Q3
11%Q3
18%Q3
26%Q3
41%Q3
54%Q3
50%Q3
15%NI exporters
considering new markets
TOP 3 MARKETS BEING EXPLORED
TOP 3 MARKETS BEING EXPLORED
ROI SMEs had plans to invest
or expand pre-Brexit
44%NI SMEs
had plans to invest or expand pre-Brexit
IMPACT OF BREXITOn Investment & Expansion Plans
ROI NI
Source: Ipsos MRBI
Source: Ipsos MRBI -41 (ROI) -38 (NI)
AIB BREXIT SENTIMENT INDEX* (Q3 2017)
Germany
France
Other Europe
Republic of Ireland
Other Europe
North America
Positive 8%
Other
Neutral50%
Other
Positive 9%21% Negative
Negative
2 | February 2018 #backedbyAIB
PASCHAL BOLGER,CULCITA,WEXFORDStarting out in 1971 as a manufacturer of lace
ethnic clothing and corporate wear, the New
Ross, Co. Wexford-based Culcita is now a leading
manufacturer, importer and distributor of
premium garden furniture and outdoor products
in Ireland and the U.K.. Customers in the U.K.
include Tesco, Sainsbury’s and Morrisons.
“We have diversified our business down through
the years to meet the demands of an ever-
changing market and we’ve been involved in the
outdoor garden business since 1980,” says the
company’s Managing Director, Paschal Bolger.
“As much as 88% of our business is exported
to the U.K. and Brexit has slammed us hard,
but we are trying to move as much as possible
away from sterling and into dollars”, he says.
“But we are not panicking just yet and business was
up last year and, hopefully, it will be up again this year.
We have been able to increase our prices while at the
same time we are getting a better price on raw materials
from our suppliers. At present we are supplying large
multiples in the U.K. but we would love to be able to
grow our business into the European market,” he says.
“Retailers like Carrefour and Leclerc in France would
be our target market, but we realise that this is not
easily done. European markets, especially in France,
require a different approach and there are cultural
aspects to consider. But we won’t go after these markets
until we are fully prepared and resourced to do so.”
With an office in China, Culcita sources new
product and raw materials from countries like China,
Malaysia, Vietnam and Pakistan. Back in Ireland, its
manufacturing plant employs 90 staff in the high
season, reducing to 20 during the winter months.
Nearly 50% of turnover is derived from products
manufactured in New Ross, according to Paschal.
“Brexit has compelled us to look at all our options
and to think more strategically. For example, one of
the opportunities might be to move our manufacturing
base to the U.K. which has lower costs to Ireland in
terms of labour, rent and rates. It would be unfortunate
to have to do this, but we have to at least consider all
our options and this is just one of them” says Paschal.
“The reality is that I do not know what the outcome
of Brexit will be and I believe nobody else does either.
In the past, we have weathered many storms and have
survived giving continuous employment for nearly
50 years in a small town and I feel confident that we
can survive through this one” he concludes. ■
CUSTOMER VIEW
a Brexit impact, albeit in
different ways and to different
degrees,” says Catherine
Moroney, Head of Business
Banking, AIB.
“Manufacturing and Tourism,
the sectors with the most
negative sentiment in this wave
of research, also report the most negative
impact on their business now. However,
sentiment in this wave has improved in the
Tourism sector, which is likely to have been
influenced by increased visitor numbers
overall in 2017, particularly from the USA,
Australia, developing markets and Mainland
Europe. Conversely, manufacturers in the
SME sector are more pessimistic about
Brexit as they report negative pressure on
costs and profit margins,” she says.
“The Index also shows that the Retail and
Food & Drink sectors are more likely than
others to be experiencing lower sales and are
most concerned about the outlook for their
sectors. While some retailers are feeling
the impact of increased UK online shopping
and cross-border shopping,
across all main categories, the
CSO reports that retail sales to
December 2017 are up year-on-
year,” says Catherine.
“In addition, transport
operators are central to the Irish
economy. With this in mind, all
sectors should consider that transporters report
a more negative impact than other sectors on
their business investment plans,” she adds.
The AIB Brexit Sentiment Index also shows
that sterling's weakness continues to have a
major impact on the cost of sales for SMEs.
This is particularly true for SMEs in NI with
62% of them reporting that it has already
impacted on their cost of sales. The sectors
particularly impacted are Retail and Tourism.
In the Republic of Ireland, meanwhile, just
10% of SMEs said that sterling's weakness
had impacted on their cost of sales with
as much as 82% saying that there was no
obvious impact. Manufacturers are the most
likely sector to have incurred higher costs,
according to the Index.
BREXIT SENTIMENT INDEX
-10
-20
Source: Ipsos MRBI
SMEs WITH INVESTMENT / EXPANSION PLANS (%)
UNDER REVIEW
51%
13%
24%
28%
POSTPONE / CANCEL
SMEs NOT PREPARED FOR BREXIT
ROI NI
Formal Plan6%
Investigations Started37%
Not Planning
Yet57%
Source: Ipsos MRBI
EXPORTERS LOOK TO NEW MARKETS
Source: Ipsos MRBI
+100-100
Most Optimistic /
Positive
Most Pessimistic /
Negative
0Neutral-36 (ROI)
-36 (NI)
AIB BREXIT SENTIMENT INDEX* (Q4 2017)
36%48% NO CHANGE TO PLANS
36%
Formal Plan2%
Investigations Started36%
Not Planning
Yet62%
CURRENT IMPACT ON COST OF SALES
9%
10%
ROI
LOW
ER
Source: Ipsos MRBI
HIG
HER
1%
62%
NI
LOW
ER
HIG
HER
23%ROI exporters
considering new markets
BREXIT’S IMPACT ON SMEs NOW
NIROI
Source: Ipsos MRBI
AdverseCurrency
Fluctuations
Less Competitive
Consumer Con�dence
AdverseCurrency
Fluctuations
Less Competitive
Consumer Con�dence41%
Neutral 71%
IMPACT ON BUSINESS NOW
ROI NI
IMPACT ON FUTURE BUSINESS
ROI NI
21% 41% 59% 63%
Positive
Negative Negative
Positive Positive
Negative Negative
Positive
8% 22%Q4
9%Q4
10%Q4 Q4
Q4 Q4 Q4 Q4
8%Q3
9%Q3
11%Q3
18%Q3
26%Q3
41%Q3
54%Q3
50%Q3
15%NI exporters
considering new markets
TOP 3 MARKETS BEING EXPLORED
TOP 3 MARKETS BEING EXPLORED
ROI SMEs had plans to invest
or expand pre-Brexit
44%NI SMEs
had plans to invest or expand pre-Brexit
IMPACT OF BREXITOn Investment & Expansion Plans
ROI NI
Source: Ipsos MRBI
Source: Ipsos MRBI -41 (ROI) -38 (NI)
AIB BREXIT SENTIMENT INDEX* (Q3 2017)
Germany
France
Other Europe
Republic of Ireland
Other Europe
North America
Positive 8%
Other
Neutral50%
Other
Positive 9%21% Negative
Negative
-10
-20
Source: Ipsos MRBI
SMEs WITH INVESTMENT / EXPANSION PLANS (%)
UNDER REVIEW
51%
13%
24%
28%
POSTPONE / CANCEL
SMEs NOT PREPARED FOR BREXIT
ROI NI
Formal Plan6%
Investigations Started37%
Not Planning
Yet57%
Source: Ipsos MRBI
EXPORTERS LOOK TO NEW MARKETS
Source: Ipsos MRBI
+100-100
Most Optimistic /
Positive
Most Pessimistic /
Negative
0Neutral-36 (ROI)
-36 (NI)
AIB BREXIT SENTIMENT INDEX* (Q4 2017)
36%48% NO CHANGE TO PLANS
36%
Formal Plan2%
Investigations Started36%
Not Planning
Yet62%
CURRENT IMPACT ON COST OF SALES
9%
10%
ROI
LOW
ER
Source: Ipsos MRBI
HIG
HER
1%
62%
NI
LOW
ER
HIG
HER
23%ROI exporters
considering new markets
BREXIT’S IMPACT ON SMEs NOW
NIROI
Source: Ipsos MRBI
AdverseCurrency
Fluctuations
Less Competitive
Consumer Con�dence
AdverseCurrency
Fluctuations
Less Competitive
Consumer Con�dence41%
Neutral 71%
IMPACT ON BUSINESS NOW
ROI NI
IMPACT ON FUTURE BUSINESS
ROI NI
21% 41% 59% 63%
Positive
Negative Negative
Positive Positive
Negative Negative
Positive
8% 22%Q4
9%Q4
10%Q4 Q4
Q4 Q4 Q4 Q4
8%Q3
9%Q3
11%Q3
18%Q3
26%Q3
41%Q3
54%Q3
50%Q3
15%NI exporters
considering new markets
TOP 3 MARKETS BEING EXPLORED
TOP 3 MARKETS BEING EXPLORED
ROI SMEs had plans to invest
or expand pre-Brexit
44%NI SMEs
had plans to invest or expand pre-Brexit
IMPACT OF BREXITOn Investment & Expansion Plans
ROI NI
Source: Ipsos MRBI
Source: Ipsos MRBI -41 (ROI) -38 (NI)
AIB BREXIT SENTIMENT INDEX* (Q3 2017)
Germany
France
Other Europe
Republic of Ireland
Other Europe
North America
Positive 8%
Other
Neutral50%
Other
Positive 9%21% Negative
Negative
Catherine Moroney, Head of Business Banking, AIB
fxcentre.aib.ie/brexit | 3
According to Oliver Mangan,
AIB Chief Economist: “The sharp
depreciation of sterling over
the past two years continues
to be the main impact of Brexit
on businesses. It is particularly
acute in Northern Ireland,
where sterling's weakness has
increased the costs of sales for 62% of SMEs.
Higher inflation and import costs as a result of a
weak sterling are the main factors at work here. In
the Republic, adverse currency movements have
been identified as being by far the main negative
impact on business to date of Brexit, which is
hardly surprising given the reliance on the UK
market for those SME firms that do export.”
Adverse currency fluctuations aside, SMEs in
both the Republic of Ireland and Northern Ireland
are reporting that a dip in consumer
confidence and spending combined
with a degree of uncertainty is
one of the main impacts Brexit
is having on their businesses
now. This is particularly evident
amongst SMEs in Northern Ireland
where consumer sentiment and
uncertainty has overtaken currency fluctuations
as the single biggest factor, with 15% of SMEs
citing this as a major concern.
One of the most significant findings in
the Q4 Index for 2017 was the lack of prepared-
ness for Brexit amongst SMEs in both the ROI
and NI. In the ROI, 57% of SMEs have yet to start
planning for Brexit’s imminent implementation
in March 2019. This compares to 62% of SMEs
in NI.
CUSTOMER VIEW
NEIL BRADLEYKEYLITE ROOF WINDOWSCOOKSTOWN, CO. TYRONEOperating in a growing global market that is
estimated to be worth in the region of €3bn
a year, the Cookstown, Co. Tyrone-based
Keylite Roof Windows has been blazing a
trail in the markets where it operates.
With 420 staff working across three locations in
Swadlincote in England, Cookstown in Northern
Ireland and a manufacturing plant in Poland, the
company designs and manufactures a full range
of roof windows, flashings, electric operation
kits, loft ladders, blinds and other accessories.
Founded in 2001, it is a standalone company operating
within the Keystone Group, one of Northern Ireland’s
most successful companies. Like many companies
based in Northern Ireland, the recent fluctuations in
sterling, brought about by the uncertainty in the lead
up to Brexit, have had an impact on the bottom line.
“From a trading point of view it hasn't had
any impact on our company but from a financial
point of view it has impacted our bottom line, as a
high percentage of our turnover is in the form of
sterling receivables but a significant amount of our
payables are in euro, dollar or Polish zloty,” says
Neil Bradley, Financial Controller of the company.
“While the Republic of Ireland and the UK are still
big markets for us, we are also selling into other
European countries like Germany, France, Holland,
Denmark, Sweden, Russia, Turkey, Israel and of course
Poland where we manufacture. We see big potential
for sales growth in Europe, particularly in Germany
and France. Germany is the largest market in the
world for roof windows and is estimated to be worth
around €1bn a year, so there is huge potential there.
We are also expanding into other global markets and
are working with distributors as far off as Australia
and New Zealand, and are currently investigating
other opportunities across the globe,” says Neil.
“Our plan to mitigate the foreign exchange risks
is to increase our euro receivables by targeting new
markets in Europe, as well as growing our market
share in the existing countries. Historically, we’ve had
to convert a sizeable amount of sterling to Polish
zloty to cover manufacturing costs and the current
exchange rate has had a significant negative impact.
So, with a more stable euro to zloty exchange rate,
it’s important that we build up our euro receivables
to naturally hedge this risk,” he concludes. ■
Oliver Mangan, AIB Chief Economist
-10
-20
Source: Ipsos MRBI
SMEs WITH INVESTMENT / EXPANSION PLANS (%)
UNDER REVIEW
51%
13%
24%
28%
POSTPONE / CANCEL
SMEs NOT PREPARED FOR BREXIT
ROI NI
Formal Plan6%
Investigations Started37%
Not Planning
Yet57%
Source: Ipsos MRBI
EXPORTERS LOOK TO NEW MARKETS
Source: Ipsos MRBI
+100-100
Most Optimistic /
Positive
Most Pessimistic /
Negative
0Neutral-36 (ROI)
-36 (NI)
AIB BREXIT SENTIMENT INDEX* (Q4 2017)
36%48% NO CHANGE TO PLANS
36%
Formal Plan2%
Investigations Started36%
Not Planning
Yet62%
CURRENT IMPACT ON COST OF SALES
9%
10%
ROI
LOW
ER
Source: Ipsos MRBI
HIG
HER
1%
62%
NI
LOW
ER
HIG
HER
23%ROI exporters
considering new markets
BREXIT’S IMPACT ON SMEs NOW
NIROI
Source: Ipsos MRBI
AdverseCurrency
Fluctuations
Less Competitive
Consumer Con�dence
AdverseCurrency
Fluctuations
Less Competitive
Consumer Con�dence41%
Neutral 71%
IMPACT ON BUSINESS NOW
ROI NI
IMPACT ON FUTURE BUSINESS
ROI NI
21% 41% 59% 63%
Positive
Negative Negative
Positive Positive
Negative Negative
Positive
8% 22%Q4
9%Q4
10%Q4 Q4
Q4 Q4 Q4 Q4
8%Q3
9%Q3
11%Q3
18%Q3
26%Q3
41%Q3
54%Q3
50%Q3
15%NI exporters
considering new markets
TOP 3 MARKETS BEING EXPLORED
TOP 3 MARKETS BEING EXPLORED
ROI SMEs had plans to invest
or expand pre-Brexit
44%NI SMEs
had plans to invest or expand pre-Brexit
IMPACT OF BREXITOn Investment & Expansion Plans
ROI NI
Source: Ipsos MRBI
Source: Ipsos MRBI -41 (ROI) -38 (NI)
AIB BREXIT SENTIMENT INDEX* (Q3 2017)
Germany
France
Other Europe
Republic of Ireland
Other Europe
North America
Positive 8%
Other
Neutral50%
Other
Positive 9%21% Negative
Negative
-10
-20
Source: Ipsos MRBI
SMEs WITH INVESTMENT / EXPANSION PLANS (%)
UNDER REVIEW
51%
13%
24%
28%
POSTPONE / CANCEL
SMEs NOT PREPARED FOR BREXIT
ROI NI
Formal Plan6%
Investigations Started37%
Not Planning
Yet57%
Source: Ipsos MRBI
EXPORTERS LOOK TO NEW MARKETS
Source: Ipsos MRBI
+100-100
Most Optimistic /
Positive
Most Pessimistic /
Negative
0Neutral-36 (ROI)
-36 (NI)
AIB BREXIT SENTIMENT INDEX* (Q4 2017)
36%48% NO CHANGE TO PLANS
36%
Formal Plan2%
Investigations Started36%
Not Planning
Yet62%
CURRENT IMPACT ON COST OF SALES
9%
10%
ROI
LOW
ER
Source: Ipsos MRBI
HIG
HER
1%
62%
NI
LOW
ER
HIG
HER
23%ROI exporters
considering new markets
BREXIT’S IMPACT ON SMEs NOW
NIROI
Source: Ipsos MRBI
AdverseCurrency
Fluctuations
Less Competitive
Consumer Con�dence
AdverseCurrency
Fluctuations
Less Competitive
Consumer Con�dence41%
Neutral 71%
IMPACT ON BUSINESS NOW
ROI NI
IMPACT ON FUTURE BUSINESS
ROI NI
21% 41% 59% 63%
Positive
Negative Negative
Positive Positive
Negative Negative
Positive
8% 22%Q4
9%Q4
10%Q4 Q4
Q4 Q4 Q4 Q4
8%Q3
9%Q3
11%Q3
18%Q3
26%Q3
41%Q3
54%Q3
50%Q3
15%NI exporters
considering new markets
TOP 3 MARKETS BEING EXPLORED
TOP 3 MARKETS BEING EXPLORED
ROI SMEs had plans to invest
or expand pre-Brexit
44%NI SMEs
had plans to invest or expand pre-Brexit
IMPACT OF BREXITOn Investment & Expansion Plans
ROI NI
Source: Ipsos MRBI
Source: Ipsos MRBI -41 (ROI) -38 (NI)
AIB BREXIT SENTIMENT INDEX* (Q3 2017)
Germany
France
Other Europe
Republic of Ireland
Other Europe
North America
Positive 8%
Other
Neutral50%
Other
Positive 9%21% Negative
Negative
Many SMEs in Northern Ireland
are concerned about the decline
in consumer confidence and
spending as well as the impact
it is having on the cost of
sales, according to the Brexit
Sentiment Index.
“The general sense amongst
SMEs is that Brexit will have a
negative impact on both their
businesses and the wider economy. Its immediate
impact in NI continues to be hard felt, with 41%
having already experienced a negative impact as
compared to 21% in ROI,” says Brian Gillan, Head of
Business and Corporate Banking, First Trust Bank.
“The cost of sales stands out as
a real issue for NI businesses with
62% reporting a higher cost of
sales. Not surprisingly, consumer
confidence, spending and
uncertainty have replaced adverse
currency fluctuations and increased costs as the main
factor having a negative impact on NI businesses right
now, with the Retail sector standing out," he says.
“It is also concerning that 2 out of 3 businesses in
Northern Ireland that had pre-Brexit investment plans
have either reviewed, postponed or cancelled those
plans. While some of this is related to the increased
uncertainty that is prevailing, I’ve no doubt that the
absence of political leadership and a functioning NI
assembly has not helped. As the survey was completed
prior to commencement of UK EU Phase 2 negotiations
on trade, it will be interesting to see how the index
evolves through future waves,” Brian says.
“Given sterling's weakness, many will have expected
more NI businesses to be considering new export
markets. However, only 15% have considered this
versus 23% in ROI. Again, this may, at least in part, be
influenced by the uncertainty which exists,” he adds.
Brian says that it’s imperative that SMEs start taking
the time to plan and consider Brexit’s implications for
their businesses.
“Our guidance to our SME customers remains
consistent. Review and analyse your supply chains and
business operating model and prepare a Brexit plan.
Being better informed will allow SMEs to consider how
they can mitigate against the risks. Armed with a plan,
First Trust Bank can better discuss how we can support
customers' financial needs whether that relates to
working capital, capital expenditure or development of
new routes to market,” he concludes. ■
THE NORTHERN IRELAND PERSPECTIVE
Just 6% of SMEs in the ROI and 2%
in NI have a formal plan in place to deal
with Brexit. As the Brexit talks continue
to gather momentum, however, there are
signs that SMEs are stepping up their plans
for life post-Brexit with 37% of SMEs in the
ROI and 36% in NI already investigating a
Brexit strategy.
Brexit is also impacting on the investment
and expansion plans of SMEs on both
sides of the Border. Of the 36% of SMEs
in the ROI which have plans to invest in or
expand their businesses, 28% are currently
reviewing them while 24% have cancelled or
postponed them altogether.
The situation in NI, meanwhile, is somewhat
starker. Of the 44% of SMEs with plans to
invest or expand, some 51% have either
cancelled or postponed, while 13% are
currently reviewing these plans.
“This ties in with CSO National Accounts
data for Republic of Ireland showing a marked
weakening in business investment last year,”
says Oliver Mangan.
A noteworthy trend is that export-
focused SMEs, particularly in the ROI, are
also looking to other markets as they seek
to reduce their dependence on the UK
market post-Brexit according to the Index.
Although 77% of SMEs in the Republic don’t
yet know if they will expand into new export
markets, 23% of them are looking, with
Europe, particularly Germany and France,
cited as the most likely option.
By comparison, just 15% of SMEs in NI are
looking to expand their exporting horizons
with the ROI cited by more than half
of exporters.
“As no sector of Irish business stands
alone, we are starting to see a domino effect
emerging. It is no surprise that over 1 in 5
exporters in ROI are now considering new
markets, with France and Germany topping
the list of destinations,” says Catherine
Moroney, who adds that SMEs need to
start planning for Brexit now, if they haven’t
already done so.
“Small to medium enterprises are facing
challenging times when it comes to Brexit
and its potential impacts,” she says. “Our
advice is that it is critical to be proactive by
putting both specific and contingency plans
in place, as Brexit represents one of the
biggest challenges to face Irish business over
the next ten years.
“At AIB, we are encouraging SMEs to
make Brexit planning a top priority in 2018.
If you need support or would like to discuss
how Brexit will impact your business, our
Business Banking team or our nationwide
Brexit Advisors are here to help you,”
she concludes. ■
Brian Gillan, Head of Business and Corporate Banking,
First Trust Bank.
The AIB Brexit Sentiment Index is based on detailed telephone interviews conducted by Ipsos MRBI from its call centres in Dublin and Belfast amongst 500 SMEs in the Republic of Ireland and 200 in Northern Ireland, operating in a number of key defined sectors.
BREXIT SENTIMENT INDEX
HOW CAN WE HELP?
AIB, Republic of Ireland Visit your local AIB branch or 1890 47 88 33
(8am - 9pm weekdays, 9am - 6pm Saturdays)
First Trust, Northern Ireland Brian Gillan, Head of Business Banking brian.m.gillan@aib.ie 028 904 79206
fxcentre.aib.ie/brexit 4 | February 2018 #backedbyAIB Allied Irish Banks, p.l.c. is regulated by the Central Bank of Ireland
-10
-20
Source: Ipsos MRBI
SMEs WITH INVESTMENT / EXPANSION PLANS (%)
UNDER REVIEW
51%
13%
24%
28%
POSTPONE / CANCEL
SMEs NOT PREPARED FOR BREXIT
ROI NI
Formal Plan6%
Investigations Started37%
Not Planning
Yet57%
Source: Ipsos MRBI
EXPORTERS LOOK TO NEW MARKETS
Source: Ipsos MRBI
+100-100
Most Optimistic /
Positive
Most Pessimistic /
Negative
0Neutral-36 (ROI)
-36 (NI)
AIB BREXIT SENTIMENT INDEX* (Q4 2017)
36%48% NO CHANGE TO PLANS
36%
Formal Plan2%
Investigations Started36%
Not Planning
Yet62%
CURRENT IMPACT ON COST OF SALES
9%
10%
ROI
LOW
ER
Source: Ipsos MRBI
HIG
HER
1%
62%
NI
LOW
ER
HIG
HER
23%ROI exporters
considering new markets
BREXIT’S IMPACT ON SMEs NOW
NIROI
Source: Ipsos MRBI
AdverseCurrency
Fluctuations
Less Competitive
Consumer Con�dence
AdverseCurrency
Fluctuations
Less Competitive
Consumer Con�dence41%
Neutral 71%
IMPACT ON BUSINESS NOW
ROI NI
IMPACT ON FUTURE BUSINESS
ROI NI
21% 41% 59% 63%
Positive
Negative Negative
Positive Positive
Negative Negative
Positive
8% 22%Q4
9%Q4
10%Q4 Q4
Q4 Q4 Q4 Q4
8%Q3
9%Q3
11%Q3
18%Q3
26%Q3
41%Q3
54%Q3
50%Q3
15%NI exporters
considering new markets
TOP 3 MARKETS BEING EXPLORED
TOP 3 MARKETS BEING EXPLORED
ROI SMEs had plans to invest
or expand pre-Brexit
44%NI SMEs
had plans to invest or expand pre-Brexit
IMPACT OF BREXITOn Investment & Expansion Plans
ROI NI
Source: Ipsos MRBI
Source: Ipsos MRBI -41 (ROI) -38 (NI)
AIB BREXIT SENTIMENT INDEX* (Q3 2017)
Germany
France
Other Europe
Republic of Ireland
Other Europe
North America
Positive 8%
Other
Neutral50%
Other
Positive 9%21% Negative
Negative
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