Not since the great recession of the late 2000s has the EU experienced so much uncertainty as it has with Brexit.
The recent extension until 2020 has done little to dissuade fears of how badly leaving the EU will affect all parties. Although some forecasters argue that the movement may result in an economic net positive across the board, the chances are looking unlikely.
Ireland, the UK’s most strategic trade partner, is expected to suffer some consequences. The heavy reliance on the UK’s economy is not only a challenge for established organisations. Even startups are bracing for the worst.
Ireland’s policies have helped the nation become one of the global hotbeds for innovation. With one of the lowest corporate taxes in Europe and competitive R&D tax credits, it’s not a surprise that startups are flocking to Ireland.
Despite the potential challenges of Brexit, Ireland has experienced an increase in the number of startups. New figures released by CRIF Vision Net show that Q3 2019 alone has witnessed the formation of over 5000 new companies.
While this growth is a great indicator of the ease of doing business in Ireland, it is only half the story. The same report records that insolvencies are up by 10% (1,519) compared to the same time last year. Early-stage companies are the worst hit with a representation of over 29% for companies between 0-6 years.
Enterprise Ireland has put a lot of effort into generating startups over the last few years. There are numerous seed and pre-seed funds for startups to help them get off the ground. However, due to the poor implementation of policies like (Business Expansion Scheme) BES, series A funding is quite problematic to come by.
With this already problematic situation, investors are wary of entering into the market, especially in case of a no-deal Brexit. However, considering recent occurrences, a no-deal Brexit is an unlikely situation. Irish organisations, however, have been warned to plan with the worst-case scenario in mind.
The government is doing its part through Enterprise Ireland to provide a soft landing for Irish startups. The Brexit Scorecard is a welcome initiative that helps companies evaluate how prepared they are. There’s also the Be Prepared Grant that allows organisations access to up to ?5000 as financial support for consultancy and travel allowances for employees.
Other notable initiatives include the Capital Investment Initiative and Market Discovery funds.
Scale Ireland, a non-profit organization aimed at bridging the start-up ecosystem and government policies, has been making pushes for critical changes ahead of Brexit. Key policy changes being requested are targeted at improving access to talent and capital for Irish firms.
The Key Employee Engagement Programme (KEEP) is one of the target policies for improvement. Its key concern is helping startups and other growing companies with employing and retaining key staff. Other key initiatives fingered for improving include Employment Incentive and Investment Scheme (EIIS), R&D tax credits and Earned Income Tax Credit for the Self Employed.
Considering the recent extension, the uncertainty around Brexit’s effects on business in Ireland will not be going away soon. Irish startups can, however, benefit from it since they have more time to prepare for all scenarios. One thing is certain though, navigating the market after Brexit will not be easy.
