Food exporters face €700m in losses due to sterling - Ibec
Published 02/08/2016 | 02:30
Food exporters to the UK could be hit with losses of around €700m if sterling weakens towards the 90p mark against the euro, the country's biggest business body has warned.
Ibec has said Irish exporters are now in the midst of a currency crisis, arguing the speed of sterling's decline is on a par with the Exchange Rate Mechanism crisis of 1992.
The body also said just one in ten businesses have contingency plans for a Brexit, and one in four have currency hedging in place, but for many these arrangements are soon due to expire, it added.
A survey by the business lobby group found that the negative exchange implications of the UK vote is by far the biggest concern of business.
Some 45pc of those surveyed saw this as the main threat from the decision by UK voters to pull out of the EU.
Sterling declined versus all of its 16 major peers yesterday as a separate report showed UK manufacturing shrank more than initially forecast in July.
Against the euro, which is the important gauge for Irish exporters into the UK market, the pound has been hovering around 85 pence.
Ibec director of policy Fergal O'Brien said the Brexit impact is "manifest and intense".
"Without urgent action to address competitive pressures, hundreds of millions of euro worth of exports and thousands of Irish jobs will be lost," he said.
"Individual businesses have been slow to talk publicly, but the feedback from members is clear and unambiguous. Businesses and jobs are already under threat.
"This is now a full blown currency crisis. For exporters, the speed of sterling's decline is on a par with the 1992 currency crisis." He added that Irish exporters to the UK were already 15pc less competitive as a result of the Brexit vote.
A separate analysis found that the impact on UK focused export sectors, such as agri-food, will be particularly severe.
Ibec said a 1pc weakness in sterling results in a 0.7pc drop in Irish exports to the UK.
"If sterling was to weaken further towards the £0.90 mark, this would translate to losses of over €700 million in food exports and about 7,500 Irish jobs in that sector alone," Ibec said.