The UK election result: Three things Irish businesses should monitor
As the UK election bombshell unfolds this morning, business owners in Ireland already having to deal with the uncertainty around Brexit will be waking up to further reasons for concern.
Below are three things that Irish businesses should monitor.
1. Falling sterling
Falling sterling – for now the market is reacting very sensitively to developments.
Initially the sterling fell to almost 88p against the euro as the first exit polls came out, however they have recovered slightly on the news that it is unlikely that Jeremy Corbyn will be Prime Minister.
“Markets were poorly prepared for this surprise result in UK. While the dramatic narrowing in polls prior to the vote had introduced an element of doubt, an outright Conservative victory was still the base case scenario for most,” Michael Metcalfe, global head of macro strategy at State Street Global Markets said.
However markets hate uncertainty and if the sterling continues to falls it will hammer Irish exports as Irish goods become more expensive for consumers in the UK.
2. Shopping 'over the border'
A weak sterling may lead to increasing numbers shopping over the border in Northern Ireland which will affect Irish businesses in the Republic, with many businesses already having to deal with increasing numbers of consumers shunning them in preference of shopping online.
3. 'Soft Brexit' unlikely
With the Brexit negotiations due to start in 10 days a ‘soft Brexit’ is looking more unlikely, this could have a detrimental affect on future trade between Ireland and the UK.
Earlier this month the British Irish Chamber of Commerce warned that a hard Brexit could result in a 20pc drop in the level of UK trade to Ireland, lead to 40,000 job losses and reduce Irish GDP by up to 4pc within a decade.