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Sterling dip, cheap cars widen trade gap with UK

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The CSO said Irish exports to Britain fell last year by 4pc to €13.5bn, while British imports here rose by 2pc to €18.75bn (stock photo)

The CSO said Irish exports to Britain fell last year by 4pc to €13.5bn, while British imports here rose by 2pc to €18.75bn (stock photo)

The CSO said Irish exports to Britain fell last year by 4pc to €13.5bn, while British imports here rose by 2pc to €18.75bn (stock photo)

Ireland's traded goods deficit with the UK rose sharply last year because of sterling's weakness and a deluge of cheap used British cars.

While Irish goods exports worldwide last year reached a record high of €152.5bn - led by medical and pharmaceutical products - we are becoming increasingly reliant on imports from Britain, which provides more goods to Ireland than any other nation.

The CSO said Irish exports to Britain fell last year by 4pc to €13.5bn, while British imports here rose by 2pc to €18.75bn. This meant the trade deficit in goods increased by nearly a quarter to more than €5.2bn.

Economists cited the British currency's Brexit-driven weakness as the critical factor, while the UK's sluggish economy weakened demand for Irish products. The pound has traded at a hefty discount to the euro since the 2016 referendum.

"A weak UK pound makes their imports cheaper and our exports more expensive," said economist Alan McQuaid.

"If this trend continues in 2020 and beyond, it will be particularly bad news for the Irish agri-food sector, where almost half of goods are exported to the UK," he said.

Ireland's goods exports to 26 other EU nations rose by 3pc to €72.6bn led by Germany, which has become a bigger export market than Britain.

Goods exports to the US - Ireland's perennial top market - rose by 19pc to €47.9bn.

And China surged ahead of Switzerland to become Ireland's second-largest buyer of goods outside the EU.

Exports to China rose 63pc to €8.9bn, while Chinese imports eased by 3.3pc to €5.25bn.

Irish Independent