It's simple: Parity against sterling at 100p means Irish firms shut down

It's simple: Parity against sterling at 100p means Irish firms shut down

Putting it plainly, sterling falling to parity at 100 pence to the euro would mean many Irish businesses would be forced to shut down.

A further sharp fall from 91.25 pence in the run-up to the Halloween deadline on top of the slide from 72 pence since the summer 2016 referendum, would be disastrous.

Many businesses here which survived the initial slump in sterling may not survive another.

We are in unprecedented times and not just with the exchange rate. I have been in the market since the early 1980s and many major global events have taken place.

Yes, sterling has been lower than current levels but only during short-lived downward spikes. And they weren’t packaged with all the other substantial challenges a no-deal Brexit will create.

This toxic combination could be worse for the Irish economy than the banking collapse in 2008. It will be the sheer confusion that causes the most trouble.

There will be chaos leading up to the deadline day of October 31, and also afterwards, if there is a no-deal outcome. That’s when the euro could hit parity with sterling.

Since the referendum in 2016, I have thought there was no way a no-deal exit would come about. Nobody, surely, is so stupid to pursue a path so dangerous anduncertain that it puts at risk thousands of jobs and the future stability of the UK itself.

Unfortunately, in Boris Johnson and his chief adviser Dominic Cummings, we have a buffoon and aseriously dangerous power-hungry individual who has no empathy.

The spin from Messrs Johnson and Cummings is mind-boggling: Tax cuts for the rich, billions spent on civil servants to ensure a no-deal Brexit goes “smoothly”, and new prison places supposedly to reduce crime. It is new politics learned at the feet of Donald Trump.

And of course, they promise a new trade deal with the US in extra quick time —despite the US having Britain over a barrel.

A weak country desperate for a trade deal in the trusting arms of Mr Trump, the president who is imposing tariffs on half the world.

Luckily, there are people in Britain who are willing to fight hard to avoid a no-deal outcome in favour of a negotiated exit. Former Tory chancellor Philip Hammond has laid down a marker he will fight all the way to avoid a crash-out Brexit.

It's simple: Parity against sterling at 100p means Irish firms shut down

There is no doubt that a bad Brexit will seriously damage many parts of the Irish economy. Britain will not get its new trade deals instantaneously, for instance, the EU and India have been negotiating a free trade agreement since 2007. Talks stalled in 2013 after 16 rounds, only resuming in 2018.

And amid the Brexit threat, we are most likely heading into a global recession. Germany is already effectively in recession and the US is heading headlong into one too.

Interestingly, sterling last faced huge pressure in 1985 but a serious depreciation of the dollar the same year allowed the UK currency to bounce 40%. This time we are going to see rates cuts in the US and Europe which may weaken other currencies and allow sterling to appreciate, regardless of the effects of Brexit.

We also have to take into account the many trades speculating that sterling will fall. These will unwind at some point and that means a lot of buying. So despite all the bad news, I would not be a seller of sterling just yet. The medium-term outlook for sterling is not that bad.

Between now and October 31 will be a hell of a ride but for those exposed to sterling weakness now may not be the time to panic.

Peter Brown is co-founder of Baggot Investment Partners, at

More in this Section

Brexit talks: Deal that's not welcome but tolerableBrexit talks: Deal that's not welcome but tolerable

Rehabilitation access: Brain trauma exacerbatedRehabilitation access: Brain trauma exacerbated

Letter to the Editor: Erdogan has blood of Kurds on his handsLetter to the Editor: Erdogan has blood of Kurds on his hands

Prize judges broke their own rules: Booker boo-booPrize judges broke their own rules: Booker boo-boo

More by this author

ECB is creating a monster with zero interest rate policyECB is creating a monster with zero interest rate policy


Food news with Joe McNamee.The Menu: All the food news of the week

Though the Killarney tourism sector has been at it for the bones of 150 years or more, operating with an innate skill and efficiency that is compelling to observe, its food offering has tended to play it safe in the teeth of a largely conservative visiting clientele, top-heavy with ageing Americans.Restaurant Review: Mallarkey, Killarney

We know porridge is one of the best ways to start the day but being virtuous day in, day out can be boring.The Shape I'm In: Food blogger Indy Power

Timmy Creed is an actor and writer from Bishopstown in Cork.A Question of Taste: Timmy Creed

More From The Irish Examiner