Business groups here condemned UK prime minister Theresa May’s speech on the UK’s plans for Brexit as being universally bad for Ireland.
Even as she confirmed that her government intended to pursue a hard line in negotiations with Brussels in the looming talks, sterling yesterday rose against the dollar and the euro as investors were placated by her comments that the UK parliament would have some sort of role in reviewing the Brexit proposals.
Sterling rose to 86.5p against the euro but remains 13% below its level of June 23 when the UK voted to quit the EU in its referendum.
Sterling’s plunge in value has piled the pressure on Irish SMEs exporting into Britain because they are in no position to cut margins to compensate for the huge currency swing.
The CSO trade figures showed that medical and pharmaceutical products — which are more likely to be made by multinationals — helped boost seasonally- adjusted exports to almost €10.2bn in November, up from €9.5bn a year earlier.
However, exporters that rely on the UK saw a slowdown as machinery and transport, manufactured goods, and foods “ all trended weaker over the course of 2016”, because of their exposure to the fall in sterling against the euro, said Davy Stockbrokers economist David McNamara.
Irish business had experienced sharp currency swings in the past, but if the euro appreciation against sterling became “the new normal” there would inevitably be firms that would lose out, Mr McNamara said.
Business groups said Ms May’s comments may have struck a more conciliatory tone than was anticipated but that the speech confirmed their worst fears that the UK had set course for a hard Brexit outside of the single market and customs union.
Danny McCoy, chief executive officer at business group Ibec, said that Mrs May’s plans to leave the single market and the customs union suggested there would be “a significant economic shock” that “would hit Irish exporters hard”.
“This is an aggressive move by the UK, showing little regard for our trading relationship and for relations with other EU member states,” said Mr McCoy.
Patricia Callan, director at the Small Firms’ Association said Irish SMEs were already apprehensive about Brexit and that the UK’s hard Brexit plans had “set out objectives that pose serious threats to small business in Ireland”.
Her speech “signalled very difficult times ahead for those firms that rely on selling to the UK market or are part of a sub-supply chain connected to the UK”, said Ms Callan.
“Ultimately, the speech was no more than an articulation of the UK’s top-line negotiating position,” said Ian Talbot, chief executive at Chambers Ireland, who said that “more clarity on barrier-free arrangements with Northern Ireland remains critical for businesses on both sides of the border”.
Brian Keegan, director of public policy and taxation at Chartered Accountants Ireland, was encouraged by her pledge to keep the common travel area between Ireland and the UK but “the act of leaving the single market and putting in place new customs arrangements will inevitably create borders”.