Irish shares fell sharply as investors took fright as British prime minister Boris Johnson said he would seek an election if MPs fail to back his new Brexit deal in the coming days. The political manoeuvres in Westminster have ratcheted up uncertainty for investors buying British and Irish assets. Sterling was little changed against the euro at 86p and $1.295.
But ignoring the cue from sterling, shares in AIB and Bank of Ireland slid 5% and 4%, respectively. The banks have nonetheless retained much of their hefty gains since Mr Johnson struck his deal with the EU this month.
Shares in Cairn Homes and Glenveagh Properties also fell back, as did Ryanair.
“With Boris Johnson threatening to pull his bill in the event that the programme motion is not approved, there is a risk of short-term sterling weakness if the timeline is rejected. Nevertheless, with top Tories claiming that they have the numbers to pass their Brexit bills, any short-term downside for the pound could be deemed a buying opportunity for traders,” said Joshua Mahony, senior market analyst at IG.
The Ftse 250 index, which tracks the fortunes of companies exposed to the UK economy, was also little changed on the day.
However, the evidence of long-term damage that Brexit is causing British companies came as Premier Inn-owner Whitbread said it was deeply uncertain about demand in the coming months. The UK hotel industry, like the economy, has suffered from the uncertainty surrounding Britain’s split from the EU, with firms reining in business trips.
“Shorter-term trading conditions in the UK regional market have been difficult, particularly in the business segment where we have a higher proportion of our revenue,” said Whitbread chief executive Alison Brittain.
She said it was difficult to predict business confidence and its impact on demand for domestic travel if the uncertainty was to drag on, or if Brexit was to end without a negotiated withdrawal process.
Additional reporting Reuters