One of the challenges we face in growing our economy is the limited size of our domestic market. Ireland’s entry into the then EEC in 1973, and subsequent adoption of the euro in 2002, opened the door to a large and developed marketplace. As the EU has progressed and expanded the four freedoms – goods, services, people and capital – the eurozone has effectively become an expanded domestic market of 340 million people.
Irish exporters have traditionally been heavily dependent on the UK and, to this end, for over a decade Enterprise Ireland has pursued a diversification strategy to alleviate this dependency – not by reducing exports to the UK, but by increasing exports faster to other markets.
In the last 10 years, this dependency has reduced from 42pc to 31pc of exports, with the eurozone being a key element of this diversification strategy, the need for which has been accelerated by Brexit.
Enterprise Ireland’s eurozone strategy focuses on our six largest markets in thecurrency bloc – The Netherlands, Germany, France, Belgium, Italy and Spain. The strategy takes a two-pronged approach – increasing the number of new exporters to the eurozone (Eurozone Start) and increasing the scale of current exporters (Eurozone Scale).
The sheer scale of the eurozone market and Ireland’s relatively low level of exports to this market underline the untapped potential. In 2019, Enterprise Ireland client companies exported €7.9bn of products and services to the UK which has a market population of 66 million, and just €5.65bn to the eurozone.
If Irish companies were to export the same per head of population to the eurozone market of 340 million people as they do to the UK, exports would be in the order of €40bn – so this tells us the size of the potential.
But although they are currently at €5.65bn, exports to the eurozone have grown by 15pc and this now represent 22pc of Irish exports, up from 20pc in 2018. And since 2009, exports to the eurozone have more than doubled, increasing by €3bn, with non-food exports performing particularly well in 2019 – growing by 25pc. The sectors which contributed most to this growth were: construction – which grew by an enormous 89pc, electronics – with 42pc growth, and digital technologies – which grew by 21pc.
One of the objectives of Enterprise Ireland’s eurozone strategy was to exceed €1bn in exports to three markets by 2020 and this was achieved in 2019 when The Netherlands grew by a huge 35pc to €1.4bn, Germany grew by 16pc to €1.3bn and France, which grew by 3pc to €1bn. In addition, Spain delivered growth of 11pc, Italy 7pc and Belgium 4pc.
This performance demonstrates the capability of Enterprise Ireland client companies to recognise and take advantage of opportunities and adapt their products and strategies to pivot into new markets.
Thanks to committed Irish companies, products and services from Ireland have a strong reputation across Europe. They are particularly recognised by their flexibility and ability to adapt to suit their customers as well as their high level of innovation.
Companies such as Cubic Telecom, a digital technology company which sells into the automotive industry, E+I Engineering, experts in global power distribution and Mercury, which builds and manage complex engineering projects, are just three of our 900 client companies who are exporting successfully to the eurozone.
Of course, Covid-19 and Brexit, have presented significant challenges for Irish businesses and the Irish economy. But as exporters, we need to engage with clients beyond the island of Ireland.
Never has it been more important to look to Europe as this represents a large, developed economy and a relatively stable political environment on our doorstep. And with the added benefits of a single currency, no tariffs, customs, or borders and increasing regulatory alignment, it is effectively an expansion of our domestic market. And thanks to our reputation, Europe has opened the door wide.
So by delivering on eurozone growth, Irish companies are proving their ability to adapt and pivot towards new opportunities and this ability will stand them in good stead in working through the current crisis.
Now is the time to put our foot to the pedal and drive our exports into markets which are looking for ‘locally-made in the eurozone’ products and services.
By Anne Lanigan, Regional Director – Eurozone for Enterprise Ireland, July 2020