Marketing

Rural hospitality “highly vulnerable” to Brexit

An economic shock like a hard or ‘no deal’ Brexit could leave rural and regional Ireland vulnerable to job losses and business closures according to a new report from the Drinks Industry Group of Ireland, the umbrella group for drinks and hospitality businesses here.

The National and Regional Employment in the Drinks and Hospitality Sectors report, authored by DCU economist Anthony Foley, shows that drinks and hospitality businesses account for significant proportions of rural employment:

  • Hospitality employment – which includes pubs, hotels, B&Bs and restaurants – accounts for 9.5% of all employment in the West of Ireland. The figure is 8% in the capital. Both are above the national average of 7.6%.
  • In terms of employment in the ‘accommodation and food service’ sector, which includes many drinks and tourism businesses, nine counties report a total employment share above the county average of 5.8%.  This is based on the Census of Population “main activity” measure.
  • Of these nine counties, six are part of Ireland’s Wild Atlantic Way and the other three are in the Ancient East region. In Kerry, accommodation and food service sector employment is as high as 10.5%.
  • The drinks industry directly and indirectly employs a total 90,000 people. When the tourism sector is included, much of which is dependent on or associated with the drinks industry, total employment is 254,400, or 11.5% of all Irish jobs.

 

As well as generating Exchequer revenue worth €2.3 billion, the drinks industry “including direct, indirect and multiplier-related employment” keeps 90,000 Irish people in work, states the report.

“The 2008 recession proved that in the event of a crisis or financial downturn, rural businesses are the first to feel the effects of closures and job losses,” points out Communications & Corporate Affairs Director at Irish Distillers and DIGI Chair Rosemary Garth in the Forward to the report, “Rural Ireland’s new recession may come in the form of a hard or ‘no deal’ Brexit.”

The new report clearly demonstrates the vital importance of the drinks and hospitality sector to rural Ireland, local employment and the economy in general, said Rosemary Garth.

It points out that from the first Quarter of 2011 to the same Quarter in 2017 (on QNHS data) full-time jobs in AFS increased by 39.0%. This was the largest increase of the 14 employment sectors.

“In many parts of rural Ireland, drinks, hospitality and tourism businesses are the primary and sometimes only employers,” she said, “This makes these areas highly vulnerable to economic shocks like Brexit.

“If a hard or no deal Brexit occurs and Sterling devalues further, British tourists will look to save their money rather than spend it. That means fewer holidays and a smaller budget when they travel. Considering the British are our single biggest tourism market, this is a significant problem for rural areas that completely rely on foreign spend to power their local economy. Without a way to offset this decreased trade, some towns and villages could face business closures and job losses not unlike those of the recession.”

The main source of employment in the drinks industry is the on-licensed trade of public houses and other bars. Since 2015 the volume of activity in bars has increased by almost 7% to the end of 2017 which would suggest a bar employment level of about 43,000 in Quarter 1 of 2018.

“Overall the broader drinks sector directly employs over 63,000 persons in both part-time and full-time jobs,” states the report, adding, “The 2016 Census of Population reported a beverages manufacturing total of 5,876 persons. Dublin accounted for 1,786 of these or 30.4%, with 4,090 or 69.6% located in the rest of the country.”

The report concludes that between 2012 and 2018 national Accommodation & Food Service employment “increased by 40% but Dublin’s AFS employment increased by 72.2% and the rest of the country increased by only 28.7%. Dublin received 47% of the AFS increase despite accounting for only 26.1% of the 2012 AFS total”.

A downturn in the drinks and hospitality trade could also harm the economy. Ireland’s drinks industry alone generates Exchequer revenue worth €2.3 billion and exports €1.25 billion in goods every year.

Faced with an uncertain economic environment, DIGI has called upon the Government to safeguard the growth of the drinks and hospitality industry by implementing a ‘defensive’ alcohol excise tax reduction.

Ireland has the second-highest overall alcohol excise tax in Europe behind only Finland. Broken down by drink type, we have the highest tax on wine, the second highest on beer, and the third highest on spirits.

“Ireland’s drinks sector is our fastest-growing manufacturing industry,” said Rosemary Garth, “In 2013, there were just four working distilleries. Now there are 18 with 16 more on the way. Since 2012, the number of indigenous microbreweries producing their own product has quadrupled.

“With lower excise tax in a stable trading environment our industry could do even more. With our current rate in addition to a hard Brexit, however, we risk damaging this hard-earned growth.

“By reducing excise, not only would the Government be rewarding consumers by putting more money back in their pockets, it would be helping to defend producers, retailers and other businesses across Ireland from the worst impacts of economic uncertainty. With less spent on excise tax, employers will be able to invest in business development and job creation, giving Ireland’s regions the necessary supports to grow in line with the rest of the country.”

 

 

 

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