Representing Ireland’s drinks and hospitality industry, including the VFI, 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.
The organisation has recommended five key policy changes and initiatives:
1) Reduce excise tax by 15 percent
2) Maintain the 9 percent VAT rate for the hospitality industry
3) Lobby for and secure EU funds to protect Ireland’s drinks and tourism businesses
4) Create regional ‘Brexit hubs’ to provide support and highlight specific local issues faced by rural drinks and hospitality businesses
5) Establish ‘Brexit Business Board’ to develop national plans and initiatives for business cost reductions
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 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.