THE surge in sterling versus the euro is set to deliver a double boost to a plethora of Irish companies and the economy as a whole.
Businesses with substantial UK revenues but whose costs – including wages – are set largely in euro are reaping a competitive gain as the single currency weakens.
Companies will also book a secondary benefit, in some cases substantial, when their UK income is translated back into euro, which can flatter sales and growth figures.
A swing that effectively puts extra cash in the hands of UK consumers sourcing goods and services in Ireland should be felt across much of the indigenous economy – with everything from farms and tourism set to benefit.
On the stock markets, names ranging from Greencore, Kerry Group and Glanbia in the foods sector, the likes of Ryanair, Aer Lingus and Irish Ferries owner ICG in transport, and manufacturers such as Kingspan, all of them with substantial sterling area sales, should enjoy a double benefit from the unexpected sterling swing.
Given their greater reliance on the British market, so-called traditional sectors are likely to reap the biggest gains. Even the likes of Paddy Power should be rewarded, given their concentration of overheads here and their strong UK income.
The other good news is that the traditional danger of importing inflation when sterling strengthens is of little or no concern in the current economic climate.
Prices may tick up as a result of the currency swing – including for energy – given our reliance on UK sourced gas.
But stagnation in the eurozone means that right now the risk of deflation is a much bigger danger to the Irish economy.
In that context, the risk of "importing" higher prices as the cost of goods and services in the UK are adjusted upwards is relatively minor.