Brexit worry stifles UK demand for imports

Exports of goods fell in March raising fresh concerns that the uncertainty ahead of the Brexit vote on June 23 is crimping demand in the UK, Ireland’s key export market.

The CSO figures published yesterday showed the unadjusted total of exports of goods fell 1% to €9.37bn from March 2015. 

Exports of medical and pharmaceutical products fell by 11% to €2.37bn, and exports of office machines and data processing equipment also slumped, by 16%, to €574m, the CSO said. 

However, it was exports to Britain that have added to concerns about the effects of uncertainty over the UK’s Brexit vote on demand for Irish exports.

“Brexit concerns impacted heavily on Ireland’s international trading sector in March, with exports to the UK falling by 8%,” said John Whelan, a leading expert on Irish and international trade. 

“Virtually all export sectors felt the contraction from the wide-ranging agri-food producers to the multinational pharmaceutical and medical devices corporations.

“The fall in exports is a dramatic change from the 20% growth seen last year and will be a concern for the new Government.”

Exports to the UK and US — boosted by the weakness last year of the euro against sterling and the dollar — have been until very recently the main drivers behind the huge increases in GDP.

Increases in GDP, which surged last year by 7.8% may increasingly rely this year on a pickup in consumer demand at home.

Mr Whelan said with other data showing falls in industrial production that SMEs exporting to Britain may have also cause for concern.

“Exports of computer hardware which started to expand again after many years of contraction grew in the month by 36%,” he said. 

“The bellwether for the SME exporter sector is the agri–food sector and here an overall 3% growth in exports was achieved, despite the falling milk price issue.

“But agri-food exports to the UK fell by 2% in the month, and fell by 1% across the rest of the EU.”

Mr Whelan said there continues to be strong demand for agri-food exports outside of Europe, as the Chinese market continues to show a strong appetite, particularly for infant formula food. 

The US market demand also increased strongly — albeit from a low base.

“The cumulative export picture for the first three months gives further cause for concern,” Mr Whelan said. 

“Exports in the first quarter were down €3.3bn on the previous quarter — the October to December 2015 period. Normally the first quarter of the year shows growth over the last quarter of the prior year.”

Sterling was little changed against the euro at 78.67 yesterday. 

The pound had traded strongly at 69 pence late last year, a rate which gave Irish exporters a huge price competitiveness when selling their goods into Britain.

Yesterday, British chancellor George Osborne attacked pro-Brexit campaigners for saying Britain should not just leave the EU but also its single market, as he sought to convince voters that the economy faces big risks in next month’s referendum.

Opinion polls have shown that voters tend to think that staying in the EU would be better for the UK’s economy but they also remain almost evenly split between those who want to stay in the bloc and those who want to leave.

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