State Aid

The increased likelihood of a hard and disruptive Brexit, and a fracture of the single market demands a series of exceptions from EU state aid rules for the Irish agri-food and drink sector. Food Drink Ireland has set out the case for exceptional support (see attached report) so that the Government and the European Commission can put in place a comprehensive package to protect viable businesses and jobs during a potentially fraught Brexit process.

The Irish agri-food and drink sector is uniquely exposed. There is a compelling case for exceptional state aid support to minimise the economic fallout and job losses. Already the currency squeeze is putting intense strain on exporters. This pressure is likely to intensify as the challenges and economic costs of a hard Brexit crystalise.

The report proposes that state aid support should be targeted across three distinct areas:
  • Enterprise stabilisation: Short term measures to allow the Irish Government to introduce enterprise stabilisation measures, as happened in 2009 during the economic crisis
  • Investment in competitiveness: Medium term measures to allow the Irish Government to introduce investment aids to support Irish food and drink companies invest in enabling technology, plant renewal and expansion, refinancing, market development and innovation to regain competitiveness following single market fracture
  • Diversification: Trade related measures, include export financing and export credit guarantees, to support the continued development of international export markets.

To justify the exemptions under existing European legislation, the report sets out the unique position and exposure of the food and drink industry. The report highlights:
  • Irish food and drink exports are more exposed to the UK than any other European sector across a large number of categories; typically four to six times more exposed than the average EU country.
  • The extensive regional footprint of the food and drink sector, including regions which are economically disadvantaged relative to the EU average, means it is directly linked to the performance of the whole economy.
  • Food and drink manufacturing accounts for half of direct expenditure by the entire manufacturing sector in the Irish economy (payroll, Irish materials and Irish services).
  • The sector provides the exclusive outlet for much of farmer/SME produce, providing extensive added value and is thus crucially important to farm incomes.
logo - Twitter