Tuesday 20 August 2019

Sterling heading for euro parity in Brexit meltdown

  

Prime Minister Boris Johnson inspects an ambulance during a visit to Pilgrim Hospital in Boston, Lincolnshire. Darren Staples/PA Wire
Prime Minister Boris Johnson inspects an ambulance during a visit to Pilgrim Hospital in Boston, Lincolnshire. Darren Staples/PA Wire
Car sales

Anne Marie Walsh and Allison Bray

The pound is plummeting towards parity with the euro as the UK braces itself for a Brexit-induced recession.

Sterling has had a dire week with a euro worth about 92p – but analysts believe that the two currencies will soon near parity.

This would spell disaster for exporters who ship goods to Britain, and the tourist industry here would suffer.

But for consumers looking North or online for bargains, weak sterling will present an opportunity.

Startling new figures yesterday revealed that the UK economy has unexpectedly shrunk for the first time in seven years.

New car sales dropped by almost 10pc here over the past year while the number of people buying used imported cars surged during the same time period, the latest figures from the CSO reveal.

Economists were pessimistic about Ireland's predicted growth and warned the threat of job losses may be moving closer as the prospect of a recession loomed across the water.

The UK economy has suffered a rude awakening as it emerged that growth fell 0.2pc between April and June, despite economists and the Bank of England predicting zero growth.

Fears are now growing that the prospect of a recession - defined as two back-to-back three-month periods of shrinking economic growth - is very real.

"Sterling's woes continued following unexpectedly poor economic data showing quarterly GDP contracting for the first time in seven years," said Gearóid Keegan, of Investec Treasury.

He said that the euro spending so long above 92p could mean that it becomes a base for a further spike to 95p or higher.

"Markets could be prone to panic moves on the back of headlines or announcements over the next few weeks," he added.

Economist Alan McQuaid said that consumer uncertainty in the UK would lead to lower demand for Irish exports while Irish products entering the UK are now more expensive because sterling is so weak.

As a result, jobs in agrifood and retail distribution - in the shape of lorries transporting the goods - are most at risk.

Meanwhile, the number of new car registrations declined by 9.7pc to 18,741 between last month and July 2018.

At the same time, the number of people registering used imported cars rose by 12.2pc to 9,203, according to the CSO's figures on first vehicle registrations released yesterday.

Irish Independent

Editor's Choice

Also in Irish News