Call for competitive focus as sterling falls on Brexit fears
The Government has been urged to put as much emphasis on maintaining competitiveness as it did on pulling the economy back from the brink as businesses are hit with renewed weakness in the pound and a slowdown in the UK.
Sterling has hit an eight-year low, sparking warnings from those in the hospitality sector of a potential fall-off in British tourists, while a new survey shows that firms here are becoming more pessimistic about the future, given the uncertainty over Brexit.
After a prolonged period of relatively benign economic numbers following last year's vote to leave the European Union, there are now signs of a potentially serious slowdown in the British economy.
They stretch from retrenching households to hesitant businesses, from a widening trade deficit to lacklustre manufacturing. Business investment was also at a standstill.
The pound has lost more than 1.4pc against the dollar since August 14, and the euro has gained the same against sterling. The pound has weakened more than 5pc against the euro since mid-July - and that's bad news for Irish exporters and the tourism industry here.
Businesses here, particularly those engaged in cross-Border sales, are growing increasingly worried.
"Things have escalated and we have to do things about this now," said Sue O'Neill, chair of the Small Firms Association (SFA).
"We're on a bumpy road here and every time we're going to get into a difficult period in the negotiations, it's going to have an effect [on sterling].
"Anything that is going to erode our competitiveness will cost jobs. We have had growth, and we can't take that for granted."
The SFA has published its Budget submission in which it calls on the Government to place the "same importance on competitiveness over the coming years as it placed on macro-economic stability in the period following the financial crisis".
"Taking into account supply chains, data flows, investment and the movement of workers and customers, there is scarcely a business in the country, small or large, that is insulated from Brexit," the submission states.
Sterling ended the week under continued pressure, hovering around the 92p mark to the euro, which is its lowest level against the single currency since 2009, if October's flash crash is excluded.
Donall O'Keeffe, secretary of Drinks Industry Group of Ireland, warned further weakness would damage Ireland's tourism offering, and thereby threaten businesses in the hospitality sector.
"The growing belief is that as Brexit progresses without clarity, sterling will continue to decline against a strengthening euro," Mr O'Keeffe said.
"This will further undermine our tourism offering by making Ireland a less affordable destination for overseas visitors. Ireland's largest tourism market is the UK.
"British visitors account for 40pc of all our overseas visitors. The UK is also our largest competitor from a tourism perspective and as their destination becomes more affordable, it creates a real challenge for the drinks and hospitality industry."
It comes as a new survey from Bank of Ireland found a muted response from businesses to activity and hiring over the coming months.
"The renewed weakness of the pound is a negative for Irish firms selling into the UK market and [our] data show a softening in export orders in August," said Dr Loretta O'Sullivan, Bank of Ireland group chief economist.
The bank's latest economic pulse highlighted an emerging divergence between households and firms, with a rebound in consumer confidence evident in recent months but business sentiment more subdued.