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Enda Kenny speaking with UK Prime Minister Theresa May.
Enda Kenny speaking with UK Prime Minister Theresa May.

Cork plans for strategic change

CORK is hugely reliant on international businesses, making Brexit and the Trump administration's policies a dual threat that will have to be tackled in the coming years.

Brexit is seen as the number one threat to business according to members of Cork Chamber in its most recent survey of members, set to be published in the coming days.

Businesses are far less worried about Donald Trump, with just 6% identifying changes to US tax and trade policies as a threat, although the Chamber said that it is too early to quantify the effects of his policies. However, the survey also measured high levels of business confidence.

While Brexit was not Ireland's choice, it is clear that the government, state agencies, businesses, and business representative groups are taking it head on and preparing for it.

The details of Brexit are not yet known and are only going to become clear gradually over a number of years of negotiations.

That means preparing for all eventualities now.

The threats of Brexit are clear. The Irish and UK economies are closely linked and interdependent across every sector, so putting up barriers - be it a hard border in the north or an import tax - will change how companies do business.

There are a number of key sectors that are particularly vulnerable, like farming and fishing, but any sector that buys and sells with the UK market has to take notice and prepare for a change of tact.

Diversification of markets is likely to be the safest strategy for most businesses. While getting the best deal on trade with the UK will be key for the government, businesses are being encouraged and assisted by state agencies to look at expanding into new markets so that they have a stronger base outside of the UK. The government is actively engaging in countries which are becoming more wealthy in order to get Irish products and produce into emerging middle-class markets, and strategies to expand within the EU are also being investigated. By making the UK market a smaller part of the Irish export market, the risks of Brexit can be made smaller too.

However, there are also some opportunities for Ireland from Brexit. EU agencies based in the UK will have to leave in the coming years, and the Irish government is making a strong play for the European Medicines Agency, given the strong presence of pharmaceutical companies here.

The City of London may also see an exodus of financial services companies as having a UK base will no longer give them access to the UK market. Both Dublin and Cork are eyeing up big name companies, and a number of companies are already creating jobs in Cork in that sector, like Willis Towers Watson, which created 40 a week ago.

Donald Trump's economic policies are an unknown threat to Irish business, with businesses and business leaders unsure of what he will do, and unsure of how they will deal with it.

Given the amount of trade between Ireland and the US, particularly the heavy presence of US businesses in Cork, any change of administration is something that has to be considered, but the unpredictable and un-traditional Trump administration poses threats based on uncertainty alone.

Based on his campaign promises and some of the early moves of his Presidency, Mr Trump has been pro-business and in favour of low tax and limited regulations, and his main priorities are to keep jobs in the US, and repatriate jobs and money from abroad.

This means that changes to the US corporate tax framework are likely to come, simplifying and lowering rates.

As Ireland's 12.5% corporate tax rate is such a huge selling point, another country competing is a cause for concern. The UK has also talked about lowering its corporate tax in order to compete post-Brexit. However, as Ireland is within the EU, it gives companies access to the largest single market in the world, making it unlikely that companies would leave. 

The impacts of both Brexit and the new US administration are yet to be seen and are a cause for concern for businesses in the increasingly international-focused Cork economy, but it's not all bad news. In the coming months, the threats will become more clear, but so will the strategies and solutions in the coming days.

See tomorrow's Evening Echo for an in-depth look at business reactions to Donald Trump's economic plans, and Friday's Evening Echo for the reaction to Brexit.