Industry Body Calls for Extension of Energy Supports Ahead of British Border Controls
Food Drink Ireland, a part of lobby group Ibec, has called for the extension of energy supports to ease cost-competitiveness pressures in light of the upcoming British border controls. The introduction of these controls on October 31st could further increase input costs for the food and drink sector. Jonathan McDade, the deputy director of Food Drink Ireland, stated that the industry continues to face ongoing costs due to Brexit and specifically the forthcoming introduction of border controls to their largest export market. McDade emphasized the need for the extension of the Government’s two energy support schemes to mitigate the impact of these controls.
The new border controls will have implications for all Irish exports to the UK, with the exception of Northern Ireland. Full customs controls will be implemented for goods moving directly from Ireland into British ports. In an effort to address the cost impact of these controls, Food Drink Ireland is seeking an extension for the temporary business energy support scheme. However, this scheme was previously extended by two months and is set to conclude at the end of this month. The €1.3bn scheme was prolonged due to low uptake among small and medium-sized firms. It remains uncertain if there will be significant interest to warrant another extension, especially as wholesale energy prices continue to decline and pressure mounts for energy providers to pass these savings onto households and businesses.
In the latest quarterly business monitor from Food Drink Ireland, it is revealed that consumer sentiment in the food retail sector continues to grow steadily. The volume of retail sales, excluding bars and motor, increased by 1% in the three-month moving average from March to May, compared to the same period last year. Additionally, the value of sales rose by 4.5% over the same period. However, the lobby group highlighted that inflation remains an issue, despite cooling to 4.8% last month. Food Drink Ireland also noted significant increases in wages, transport costs, and wholesale energy prices compared to three years ago, indicating long-term trends that could impact the sector.
In conclusion, the food and drink sector in Ireland is facing significant challenges due to Brexit and the impending introduction of border controls. Food Drink Ireland is calling for the extension of energy supports to alleviate cost-competitiveness pressures. The impact of these controls on Irish exports to the UK, excluding Northern Ireland, is expected to be significant. While the temporary business energy support scheme is being sought for an extension, its low uptake and declining wholesale energy prices raise doubts about the necessity of another extension. Nonetheless, consumer sentiment in the food retail sector is growing steadily, although inflation remains a concern. The long-term trends of increasing wages, transport costs, and wholesale energy prices also pose challenges for the industry.