Ireland’s Drinks Industry Recommends Five-Point Brexit Plan to Government
Representing Ireland’s drinks and hospitality industry, the Drinks Industry Group of Ireland (DIGI) has recommended a five-point Brexit plan to the Government ahead of Budget 2018, which includes a policy to establish regional Brexit hubs to provide support for rural drinks and hospitality businesses and a 15 percent reduction in excise tax.DIGI’s recommendations come as Brexit continues to devalue the sterling and encourage cross-border shopping, both factors which could cost Ireland’s drinks and hospitality businesses as much as €130 million this year.
This finding was detailed in a new report, The Economic Impact of Brexit on the Drinks and Hospitality Sectors, published by the Drinks Industry Group of Ireland (DIGI) and authored by Dublin City University economist Anthony Foley, which outlines a number of Brexit scenarios and how they could affect Ireland’s drinks industry and wider hospitality sector.
Ireland’s tourism industry, which is inseparable from its drinks industry, is disproportionately reliant on the British market. 40 percent of all foreign visitors to Ireland originate from the UK, but a weaker pound has made this country more expensive as a holiday destination.
In the first seven months of 2017, the number of British visitors to Ireland dropped by 6.2 percent. If this decline continues, based on previous spending patterns (British tourists spent €1.1 billion in Ireland in 2016), Irish businesses could lose out on as much as €70 million in revenue this year alone.
Cross-border shopping is also on the rise: in Q3 2016, the latest data available, the number of Republic of Ireland-registered cars in a sample of Northern Ireland shopping centres was 56.3 percent, the highest since Q4 2009. This trend is likely to continue as the sterling approaches parity with the euro. The DIGI report estimates that this could cost Irish drinks businesses €60 million this year as Republic of Ireland shoppers cross the border to buy cheaper alcohol.
The drinks industry directly employs 92,000 people and enables 210,000 jobs in the wider hospitality sector. Through a nationwide network of pubs, hotels, restaurants, off-licences, distilleries, microbreweries, wholesalers and distributors, the drinks industry exports €1.25 billion in goods annually and generates €2.3 billion of revenue for the Exchequer.
A Brexit-induced downturn, however, could lead to job losses and business closures, especially in rural Ireland where the industry is often the major—and sometimes the only—employer.
DIGI is calling on the Government to take special notice of Ireland’s drinks and hospitality sector as it formulates Budget 2018, or what it has dubbed the ‘Brexit Budget’, the penultimate before the UK officially leaves the EU. The organisation has recommended five key policy changes and initiatives:
- Reduce excise tax by 15 percent
- Maintain the 9 percent VAT rate for the hospitality industry
- Lobby for and secure EU funds to protect Ireland’s drinks and tourism businesses
- Create regional ‘Brexit hubs’ to provide support and highlight specific local issues faced by rural drinks and hospitality businesses
-Establish ‘Brexit Business Board’ to develop national plans and initiatives for business cost reductions
Commenting, Secretary of DIGI and Chief Executive of the Licensed Vintners Association (LVA), said: “Ireland has already felt the tremors of Brexit. Our new report estimates that if trends in British tourism and cross-border shopping continue, perpetuated by a devalued sterling, Irish drinks and hospitality businesses could lose as much as €130 million this year alone.“If the UK leaves the EU without a deal and a hard Brexit occurs, this cost will be much more significant. In addition to less tourism spend and more cross-border shopping, Irish drinks exporters will be subject to tariffs, new regulations, border checks and a smaller UK market, all of which will lead to massive administrative expenditure that could easily sink some smaller SMEs in our industry.
“DIGI strongly urges the Irish Government to enact pro-enterprise, pro-growth measures in Budget 2018 that safeguard Ireland’s most vulnerable industries, particularly the drinks and hospitality sectors which are disproportionately exposed to Brexit. “Many of DIGI’s recommendations can be put into action immediately, like reducing excise tax. Ireland’s punitive excise tax, the second highest in the EU, makes our drinks and hospitality businesses less competitive, particularly for British tourists with weaker sterling and Irish shoppers drawn across the border for more affordable alcohol products.
“DIGI believes that closer collaboration and cooperation between businesses, representative bodies and the Government, through local Brexit hubs and a national Brexit Business Board, will create real solutions that help drinks and hospitality businesses weather the coming Brexit storm and grow into a post-Brexit future.”