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Intermediate goods inputs and the UK content of Irish goods exports

Report – Half of Irish imports used by Irish-owned firms sourced in the UK

 

 A significant amount of analysis has been completed to date that looks at the impact of Brexit on Irish exports. However, the same analysis had not considered the extent to which these exports incorporate imported intermediary goods from the UK.

This Enterprise Ireland and DBEI sponsored report produced by the ESRI explores and uncovers some of the possible risks regarding the import supply chain post-Brexit and how this will affect Irish SMEs.

The report found that the UK accounts for 25.7% of total Irish goods imports, making it a considerably larger source of imports than it is a destination for exports, where it makes up 13.8% of the total.

It highlights that indigenous firms are more dependent on imported goods from the UK compared to foreign-owned firms. In turn, this makes indigenous firms more exposed to the potential risks and disruptions across their supply chain.

Over half of total imports of Irish owned firms are sourced from the UK and from this over half are intermediary inputs with another third being food products.

Another risk to firms’ exporting performance is likely to come from tariffs on goods/components imported from the UK. Figures suggest an average rate on Irish imports from the UK would be approximately 6% in the event of WTO-level tariffs being applied, but with considerable variation around this rate. The food sector would the worse off, subject to tariffs as high as 18 % in a hard Brexit scenario.

 

What should Irish SMEs be considering now?

 

With under half of the total imports having a medium reliance on the UK, it shows that possibilities do exist to find alternatives in Eurozone markets that will elevate some of these Brexit risks. Firms should understand the type of products that they import and look to determine the value to the business of these imports along with the risk impact if the import supply chain is impacted by Brexit. Once determined, a firm can start to put together a contingency plan to addresses the imports that are most critical. This is what we consider as “No Regrets” decision making as understanding your import supply chain and sources of alternatives makes good business sense irrespective of what Brexit brings.

Read the full report here. This report was produced by ESRI in July 2018 and sponsored by Enterprise Ireland and the Department of Business, Enterprise and Innovation.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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