Ireland feeling the first Brexit chills as exporters pounded by slump in sterling
Published 23/03/2016 | 02:30
Ireland's largest companies are beginning to feel the effect of Britain's debate over whether to remain in the European Union, and it may be a taste of what's to come for the rest of the nation.
Concern about the outcome of the UK referendum in June has helped push the pound down 10pc against the euro since November.
About 60pc of Irish companies selling goods overseas are already affected.
"Sterling has deteriorated and that's tough for Irish exporters," Richard Pym, the English-born chairman of AIB, said in an interview in Dublin this month.
"Upon Britain leaving EU, one would anticipate that sterling would come under pressure again."
Brexit is probably the single biggest risk facing the economy, the fastest growing in the euro region.
The question is over the EU's integrity, according to Guillermo Hermida of CaixaBank Asset Management in Madrid.
Cracks in the bloc would undermine investor confidence in its weakest members, the so-called peripheral nations, he said in an interview in the Spanish capital. That would include Ireland.
Permanent TSB, a bank that's still trying to recover from Ireland's financial crisis, said this month that concern about Britain's membership in the EU is hampering its efforts to sell £2.4bn (€3bn) of UK loans. "Brexit risk has caused me to slow down the process because I think we're on the wrong side of the line," Jeremy Masding, the bank's chief executive, told analysts. "I want to wait until I see what the result of the referendum is and then see how the markets react."
Irish-listed Dalata Hotels, which operates in London, Manchester and Leeds as well as in Ireland, warned this month that the UK might generate less revenue as sterling slides.
Ryanair gets about 27pc of its sales from the UK and will be the biggest Irish loser along with drinks company C&C and agricultural products company Origin Enterprises, according to securities firm Investec.
"We don't think it would have an immediate impact on our business," Ryanair's chief marketing officer, Kenny Jacobs, said in an interview with Bloomberg Television.
"In the medium and longer term, it would create some uncertainty if Britain were outside of Europe."
It's not all bad news for Ireland, with Dublin presenting an "obvious choice" for financial companies seeking to relocate following a UK exit from the EU, the NTMA said in a presentation last week.
"Estimates suggest some €6bn of FDI might be attracted to Ireland in the case of Brexit," the debt office said. (Bloomberg)