Euro at 91p puts more pressure on Irish small firms exporting into Britain

Irish firms will find it more difficult to trade profitably into Britain the higher the euro marches against the sterling
Euro at 91p puts more pressure on Irish small firms exporting into Britain
A Union Jack piggy bank lays broken on the day the UK officially went into recession.

The euro has risen against sterling to over 91 pence against sterling, potentially putting more pressure of small Irish companies which depend on selling goods and services at competitive rates into Britain. 

The rise in the euro to over 90 pence has yet to match the worst times of the Brexit crisis in recent years when it appeared that Britain was intent on carrying out its threat to drop out of the EU without a transition deal. 

The effects for small Irish firms and in particular food companies that rely on selling into the British markets are nonetheless still marked because it comes at a time when consumers are reeling from the fallout of the Covid-19 economic stress on both sides of the Irish Sea. It becomes more difficult for Irish firms to sell profitably into Britain the higher that euro marches against sterling.         

Sterling edged lower on rising concern that the year-end Brexit transition period will run out without a deal between Britain and the EU, and foggy economic prospects for the UK as the country emerges from its coronavirus lockdown.

The fact that the UK will not be part of the EU's €750bn recovery package “is not helping the pound”, said Kenneth Broux, head of corporate research at Societe Generale.

On top of that, euro-sterling may be bouncing off the lows it fell to recently when central banks were possibly rebalancing their reserve requirements, said Mr Broux.

Some of the declines in the British currency have been attributed to worries around Britain's break with the EU.“The performance of the pound in recent weeks suggests Brexit risks are starting to play a role,” said Derek Halpenny, head of research at MUFG. 

Additional reporting Reuters 

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