Hard Brexit will have ‘substantial’ affect on Gaeltacht companies, review warns

The impact of a hard Brexit on companies in the Gaeltacht will be "substantial", a new spending review published by the Department of Public Expenditure has forecast.

The new review also warns that preparations for dealing with Brexit have been hit by the Covid-19 pandemic.

The review, which was carried out by officials in the Department of Tourism, Culture, Arts and the Gaeltacht says companies in the Irish-speaking regions are significantly more exposed to a disorderly Brexit than the economy in general, due to their reliance on the UK as both an export market and a source of raw materials and other imports.

" Given that a hard Brexit with World Trade Organisation (WTO) tariffs is becoming increasingly likely, the impact on Údarás na Gaeltachta client companies will be substantial."

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There are seven Gaeltacht regions in the State. They are mainly rural, coastal areas in counties Cork, Donegal, Galway, Kerry, Meath, Mayo and Waterford and overall have a population of just under 100,000.

The new review says that Údarás na Gaeltachta supports more than 1,000 client companies, ranging in size from sole traders and micro-enterprises to large-scale manufacturing companies.

The spending review, published by the Department of Public Expenditure on Thursday, says Údarás na Gaeltachta has been working with its client companies to encourage awareness of the full range of supports that are available.

However it says “previous uncertainty regarding the timeline of Brexit, aligned with the unforeseen impact of Covid-19, has led to a low level of engagement thus far”.

“[The year] 2020 was to be the year of intensive Brexit preparedness for many Údarás na Gaeltachta companies, but the outbreak of Covid-19 has meant that Brexit planning has largely been displaced by companies dealing with the immediate sustainability and liquidity issues arising from Covid-19.”

The spending review says that 85 per cent of Gaeltacht companies have fewer than 10 employees. It says this means “they may not have sufficient staff resources with the capacity and/or specialist knowledge required to engage in Brexit preparations and/or manage the application process for Government supports”.

“This capacity constraint is significant in dealing with economic shocks such as Brexit and Covid-19.”

The review says that the lack of broadband and digital infrastructure in Gaeltacht regions “is a major barrier to innovation and competitiveness, as well as limiting their ability to react quickly to changes in the global economy such as the shocks caused by the Covid-19 pandemic and Brexit”.

“There is potential to attract new remote workers, as a result of the change in work practices accelerated by the Covid-19 crisis. Údarás na Gaeltachta has invested in a network of co-working hubs, Gteic, in recent years and increased investment in these, in particular to provide high-speed broadband would provide opportunities for people to relocate and work in Gaeltacht regions.

“Additional Brexit preparedness supports are now of limited value and a renewed effort should be made to ensure that businesses are supported through the transition to the new trading relationship between the UK and the EU. Therefore, Údarás na Gaeltachta must now focus on post-Brexit supports rather than preparedness and in particular on market diversification to ensure Gaeltacht companies and employment survive the worst impacts of Brexit and Covid-19.

The review says that “sensitivity analysis conducted by Údarás na Gaeltachta in 2018 identified 1,000 jobs at risk in its client companies as a result of a hard Brexit.

“In addition, Údarás na Gaeltachta conducted a survey of its client companies in March 2020 and found that companies had already made significant temporary reductions in their workforce and a small number of permanent redundancies . The smaller enterprises (up to 50 employees) have lost a larger share of their employees as a result of Covid-19”.