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FDI calls for exemptions from EU state aid rules post-Brexit

21 February 2018

Food Drink Ireland (FDI), the Ibec group that represents the food and drink sector, has said the economic consequences of a hard and disruptive Brexit, as outlined by the Copenhagen Economics report commissioned by the Department of Business, Enterprise and Innovation, would require a series of exemptions from EU state aid rules for the Irish agri-food and drink sector.

FDI called on the Government and the European Commission to put in place a comprehensive package to help viable businesses deal with the fallout of Brexit, the fracture of the EU single market and the massive disruption to our vital export trade.

FDI Director Paul Kelly said: "The Irish agri-food and drink sector and its 230,000 associated jobs is uniquely exposed. €4.5bn of food and drink exports are destined for the UK, with the Copenhagen Economics report highlighting that beef, processed food and dairy are the Irish sectors most at risk. There is a compelling case for exceptional state aid support to minimise the economic fallout and job losses arising from Brexit. Already the Euro-Sterling currency squeeze is putting intense strain on exporters. This pressure is likely to intensify as the challenges and economic costs of a hard Brexit crystallise.

“State aid support should be targeted by Government through measures to help the sector innovate to maintain its competitiveness, diversify export market profile and transform in the face of the dangerous impacts of Brexit.

“In order to support food and drink businesses, funding needs to be provided immediately to help companies prepare for the worst impacts of Brexit. This would be funded from both Government and EU sources to allow the Irish Government to introduce investment aids to support Irish companies invest in enabling technology, plant renewal and expansion, refinancing, market diversification and innovation to regain competitiveness following single market fracture. These resources, where appropriate, should be available to both exporters and smaller Irish producers which risk being displaced by cheaper UK imports in their home market.

"The industry is deeply integrated into the wider economy and its broad geographic footprint means the regions are particularly exposed to any shock to the sector. In the short term, the objective must be to put in place mitigating measures to help companies manage their businesses through on-going currency shifts and during exit negotiations and the transition period. The medium-term focus must be on maintaining market share in the UK, developing international markets and ensuring that in the domestic market, companies remain competitive against imports and the threat of cross-border shopping," concluded Mr. Kelly.