Monday 5 December 2016

Explainer: Time to head North? Why is the sterling plummeting and what does it mean for the average Irish shopper?

Published 07/10/2016 | 09:22

Photo: Bloomberg
Photo: Bloomberg

In case you haven't noticed the sterling is weak right now, really weak. The currency fell to a 31-year low against the dollar this morning.

  • Go To

What is a good deal more relevant to ourselves is the fact the pound traded at nearly the same price as the euro today. That doesn't mean you'll get a pound for your euro but it does mean you could have at one stage this morning.

What happened is known as a 'flash crash', which means the value plummeted for a short period of time, usually caused by a large order of someone perhaps changing their pounds into euros.

The sterling has been hit hard by talk from nearly all relevant parties of what is known as a "hard exit" for Britain.

This is the fallout from Brexit.

Britain leaving the EU is due to have a host of long-term effects for Irish businesses and consumers, but right now in the immediacy, it means the pound is very cheap, meaning you'll get very good value shopping in the UK.

2016-10-06_wor_25260920_I1.JPG  

British Prime Minister Theresa May delivers her speech on the final day of the annual Conservative Party Conference in Birmingham yesterday. Photo: Reuters

The currency has taken a major hit since British Prime Minister Theresa May spoke at her party's national conference during the week.

Ms May outlined her plan to begin exit talks before the end of March and also firmly declared a "hard Brexit".

What this means from an economic stand point is this: Britain will most likely not be in the Single European Market.

Being part of the market has long been one of the best incentives for joining the EU. It allows businesses to trade with other member states without barriers making trading with countries within the Union typically more attractive than those outside.

The Prime Minister declaring a hard Brexit has generated significant uncertainty around business in the UK, naturally.

As a result confidence in its currency has waned, causing its value to drop.

What does it mean for Irish shoppers?

Right now a pound is worth around €1.11, which is extremely low, even compared to the start of the year. In January a pound would have bought you about €1.35.

So Christmas has come a little early you might say. There's a long ingrained tradition of "heading up to the North" to do the festive shopping and this year may be one of the best to do so.

It's difficult to say clearly how much you'll save from you average shop with major disparities in products with sales ongoing and the likes.

A good measure is electronics. From smartphones to consoles it doesn't take long to work out whether or not it's worth your while buying across the border.

Take Apple's new iPhone 7 for example. Sure to be a favourite on Christmas lists this year and with a price tag of €779 here definitely one of the more expensive gifts you can buy.

iPhone sale.PNG  

Apple's UK store shows an iPhone 7 will set you back £599 (€670).

However, take a look at the tech giant's UK website and you'll find the handset will cost you £599 or €670, a saving of €109.

The savings won't be just in tech but it's a good indicator of what discounts you can get. What will be interesting to see is if UK firms start to bump up their prices in response to the ailing currency.

Online Editors

Read More

Promoted articles

Editors Choice

Also in Business