Irish firms are stepping up scrutiny of the “Brexit” question, according to a survey by The Irish Times.

Although there is little to suggest alarm in Irish corporates at the prospect of Britain leaving the European Union, it is generally recognised that such departure would have “significant” business implications in Ireland.

The referendum could be held in June if prime minister David Cameron strikes a deal in Brussels this week to recast his country’s membership. This remains a “non-issue” for some senior Irish business people, said one senior figure, but it is increasingly coming into focus.

Survey questions centred on whether the referendum itself was an important business issue and on the potential impact of a “Brexit” on business operations. Firms were also asked whether their boards have discussed the matter, whether the referendum itself had led to strategic action and whether “Brexit” contingency plans had been drawn up.

Numerous risks were cited in the 21 responses received and concerns vary according to the business sector in question.

While respondents believe Britain will ultimately vote to stay in the EU, there is confidence that the political, legal and trading hurdles presented by a British departure scenario can be overcome.

One line of argument suggests the gathering intensity of the debate is reminiscent of the Y2K “millennium bug” affair, in which fears of technological disaster at the turn of the century proved unfounded.

Variables

Moreover, some respondents stressed that the potential change was but one of many variable forces in play.

“Brexit has the potential to disrupt financial markets, which is at the core of our business. However, markets are just as likely to be impacted by other factors (such as the oil price, central bank policy, global growth, China), so it will be impossible to discern one input from the others.

“A certain unpredictability is a fact of life in our sector,” said one stockbroker. Another broker expressed confidence that the terms of a Brexit would be cast to minimise damage disruption to business.

“It is our view that in a Brexit scenario, it is likely that the UK would form a relationship with the EU similar to the relationship already in place between the other countries outside the EU, including Switzerland, Norway, Iceland and Liechtenstein. In such cases, our view is the implication for the Irish economy and our company would be small,” the firm said.

“If, however, the unlikely event transpired of the new relationship between the UK and the EU changing dramatically with trade barriers and tariff introduced, we would have to re-evaluate our UK strategy and operations.”

Similarly, a big hotelier said the likely impact of a British exit was “impossible” to determine without specific details on the terms of departure. However, a large firm with supply and retail operations said a British exit “would add cost and complexity to our relationships with UK-based suppliers and with our business in Northern Ireland.”

KPMG Ireland managing partner Shaun Murphy said he believed on balance that Britain would not “sleepwalk into a damaging exit”, but added that there would be a significant impact if it did. “We could absorb a lot of time reflecting on possible responses in the event of an exit without a trade agreement – that is not a great investment of limited time,” he said.

Degree of uncertainty

In the world of business law, the British plebiscite is seen an important issue by large Irish firms. “The referendum is causing some degree of uncertainty because in reality it is simply too early to say whether Brexit will or will not happen, or the terms that may apply or may not apply,” said Julian Yarr, managing partner at solicitors A&L Goodbody.

John Cronin, partner at McCann FitzGerald, said the firm has established an internal group to deal with the issue. A British vote to leave would create political, economic and legal uncertainty in the business world, he said.

“Even if an investment deferred for six months or 12 months, that’s not good for people.”

Another legal firm said the uncertainty around a “Brexit” could impact on its business.

“There may be some opportunities if a number of international and British clients establish bases in Dublin and move operations from London.”

Specific issues arise for energy firms, said a major player in that sector.

“Energy policy, particularly in relation to electricity, in Ireland and the UK is heavily influenced by regulation at EU level . . . Should the UK choose to exit Europe then over the medium-term to longer term divergence in energy and climate policy may lead to less efficient outcomes than would otherwise be the case.”

Renewable energy firm Oriel cited concern about the possibility that Britain could opt out of “energy union” initiatives if it left the EU.

Oriel is building a large offshore wind project in the north Irish Sea. “The project will, most likely, export clean renewable energy into a regional energy market comprising France, Britain and Ireland. A Brexit could complicate this.”