Budget must help food &drink sector maintain competitiveness

Food Drink Ireland (FDI), the Ibec group that represents the food sector, today launched its Budget 2018 submission (attached). which calls on Government to introduce a series of measures so that the sector can maintain its competitiveness and achieve its growth potential against the backdrop of Brexit and a significant weakening of sterling. In order to support businesses, FDI said funding must be provided over a three year period to help companies trade through any period of disruption, adapt and succeed into the future. The resources required will be in the region of 5% of the value of current annual export sales to the UK by Irish agri-food, or €600 million over three years. This would be funded from both government and EU sources to allow the Irish Government to introduce investment aids to support Irish companies invest in enabling technology, management training, plant renewal and expansion, refinancing, market development and innovation to regain competitiveness following single market fracture. These resources, where appropriate, should be available to both exporters and smaller Irish producers which risk being displaced by cheaper UK imports in their home market.
FDI Director Paul Kelly stated: “Almost 40% of our food and drink exports (€4.1bn) go to the UK. Our industry has already been severely impacted by exchange rate exposure, with the value of trade to the UK reduced by €570m in 2016. The continued weakening of Sterling will cause further reductions to the value of exports as well as job losses. Budget 2018 must support our efforts to maintain strong markets in the UK, as well as ensuring that food companies in the domestic market remain competitive against imports and the threat of cross-border shopping. To do this we need to keep business costs under control. At a time of such uncertainty, government also needs to avoid ill-considered public health measures such as soft drink taxes and proposals to introduce deposit return schemes for packaging. To support the wider food, beverage and hospitality sector, the 9% VAT rate needs to be maintained and alcohol excise reduced by 3.5%.”

The FDI Budget 2018 submission calls for:

Brexit proofing

Funding for Brexit mitigation, amounting to €600m over three years.

Changes to the EU State Aid Rules.

Increased funding for state agencies.

More trade support and market opportunity measures.

The 9% reduced VAT rate in hospitality to be maintained.

Consumer taxation

Reduce alcohol excise by 3.5%.

Existing VAT rates to be maintained.

No tax on soft drinks.

Proposals to introduce a deposit return scheme for packaging should be opposed.

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