A LARGE NUMBER of retailers believe Brexit will do more damage to their business than the recession.
That’s according to a new survey by business group Retail Excellence Ireland, which found that 40% of shop owners believe their trade will suffer more from the UK’s vote to leave the EU than it did in the years after the financial crash.
Almost 440 business owners participated in the Retail Excellence survey, which found that the vast majority of retailers – nearly 70% – have abandoned growth and expansion plans because of the uncertainty surrounding Brexit.
More than a quarter said they think they will let staff go as the 2019 Brexit deadline draws nearer.
Firms are particularly concerned about the effect a weaker pound will have on their businesses, as it makes shopping in Northern Ireland or Britain a more attractive option for many items.
Commenting on the survey results, Retail Excellence deputy chief executive Lorraine Higgins said: “There are some very stark warnings about the potential challenges ahead.
“What is particularly notable is the sharp deceleration in optimism in the industry with 64% of respondents more pessimistic about the prospects for their business than 12 months ago and 69% having abandoned their growth and expansion plans,” she said.
Higgins said the survey results were particularly worrying because the retail sector is “perhaps most exposed to pressures on household budgets”.
A so-called ‘hard’ Brexit is expected to have a particularly devastating effect on the Irish economy, costing tens of thousands of jobs in the Republic, according to a government report.
Meanwhile, the most recent retail sales index from the Central Statistics Office showed that retail sales increased 3.3% in May 2017 compared to the same month last year – but the growth in value of those sales was much more sluggish, increasing just 0.8% during that period.
Other findings from the Retail Excellence survey included:
- Just 2% of retailers think Ireland should leave the EU
- More than a quarter believe Brexit is already having an impact on trade
- 43% believe currency devaluation is the biggest threat to their business
- Over a third say online shopping is their biggest threat
- 86% believe that with the impact of Brexit their turnover will fall.
Earlier this month, Retail Excellence – which represents more than 1,750 companies in Ireland – called on the government to lower the 23% VAT rate by 3%.
Unsurprisingly, a reduced VAT rate is a ” priority issue” for the business group for Budget 2018.
“While many industries talk about the potential impact of Brexit, it is clear retail is already being affected,” Higgins said at the launch of Retail Excellence’s pre-budget submission.
“Our quarterly trading reports compiled in conjunction with Grant Thornton have recorded three-successive quarters of decline primarily as a consequence of sterling devaluation and a migration to online shopping,” she said at the time.