Brexit has negatively impacted 40pc of Irish exporters. To fight back, exporters will need to invest more in R&D and crack open new markets.
The impact of Brexit is already being felt by Irish exporters, but despite this overall exports grew 6pc year on year to reach a record €23.8bn for 2018, Enterprise Ireland has revealed.
Two-fifths (40pc) of Irish exporters say they have been adversely affected by the UK’s planned exit from the EU.
‘These record export results show the resilience of Irish exporters to grow their global footprint in uncertain times’
– JULIE SINNAMON
While exports to the UK grew by 4pc to €7.9bn in 2018, the overall concentration of exports to the UK has been reduced. The overall dependency of Irish exporters to the UK declined to 33pc, a target Enterprise Ireland has set for 2020.
The eurozone region, which is a key focus of Enterprise Ireland’s diversification strategy, saw growth of 7.6pc to €4.8bn, with Germany, France and the Netherlands each exceeding €1bn in exports. Exports to North America increased from €3.87bn in 2017 to €4.08bn in 2018, an increase of 5.5pc.
The resilience of Irish exporters
“These record export results show the resilience of Irish exporters to grow their global footprint in uncertain times,” said Enterprise Ireland CEO Julie Sinnamon.
“Our target is to increase exports to €26bn per annum by 2020, which we are on track to do. However, a hard Brexit and challenging global trading conditions will negatively impact on export growth for the year ahead.
“We are also working to help Irish exporters increase their levels of investment in R&D, which is critical to mitigating the impact of Brexit and to successfully compete in international markets. Our research shows that companies who invest in R&D and take up R&D supports achieve an average of 67pc growth in global sales.”
In terms of sectors, the construction sector recorded the fastest growth – a whopping 22pc on 2017 to €1.97bn – in 2018.
Fintech saw exports grow 17pc to €829m while engineering grew 9pc to €1.6bn, digital technology exports grew 6pc to €2.2bn and food exports grew 1pc to €11.68bn.
“While overall investment in R&D by Enterprise Ireland client companies increased by 5.6pc to €970m in 2018, stronger growth is required to reach our 2020 target for companies to spend €1.25bn on R&D,” Sinnamon warned.
“The industrial sector increased investment in R&D by an average of 8pc, the digital sector by 5pc and the food sector increased by 1pc. While overall R&D expenditure grew in 2018, as a share of company sales it remained flat. Accelerated investment in innovation is critical across all sectors to underpin export growth and maintain competitiveness.”
Enterprise Ireland released the findings of a recent Brexit survey of more than 2,000 clients, finding that Brexit had already negatively impacted 40pc of exporters, rising to 60pc in the food sector.
The survey found that 38pc of companies expect revenue to be negatively impacted in 2019. Meanwhile, 40pc of companies expect profitability to be negatively impacted, and 29pc of companies expect their ability to invest to be negatively impacted.
“I am delighted to see Irish exporters achieve record levels of export growth of €23.8bn against the backdrop of Brexit uncertainty,” said Minister for Business, Enterprise and Innovation Heather Humphreys, TD. “Increasing the export sales of these companies translates into sustaining and creating high-quality, sustainable jobs across the country – something that this Government is firmly focused on through the Future Jobs Ireland framework.
“In addition, I am pleased to see that we have reduced our dependency on the UK to 33pc of Enterprise Ireland exports, down from 44pc in 2007.
“Diversification is a key part of our Brexit response, and trade missions provide a key opportunity for Irish exporters to access new markets. Next week I am leading a trade mission to New Zealand to promote opportunities for the agritech sector, which will further support this objective.”
Updated, 12.26pm, 30 May 2019: This article was amended to clarify that the construction sector recorded a figure of €1.97bn, not €1.7bn.