Sterling’s abrupt fall has unleashed a wave of cheap imports from the UK and caused misery for Irish exporters
Imports from the UK have surged to 16% above their 2015 levels, stoking fears that Irish firms will struggle to compete
Meanwhile Irish exports slumped by 11% in July, as businesses face a “full-blown currency crisis”
Dublin, 24th October 2016 – The plummeting value of sterling is putting pressure on Irish businesses both at home and abroad, according to new research by the foreign exchange specialist FEXCO Corporate Payments.
The data reveals the full scale of the boom in Irish imports from the UK since the result of the Brexit referendum triggered a dramatic fall in the value of the Pound.
The analysis, of more than 2000 transactions made through FEXCO Corporate Payments*, shows that by September Irish businesses were importing 16% more British goods and services than they did in September 2015.
The import splurge is most acute in the transport sector. Purchases of cars and other vehicles from the UK were a third (33%) higher in September than at the same time last year.
Imports from the UK in the construction, energy and utilities sector were also up sharply, rising by a fifth (20%) on their September 2015 levels, with wholesale imports of British goods climbing by 5%.
Individuals are cashing in on the weak Pound too, with FEXCO recording a surge in personal customers sending money to the UK. In September, transfers from Ireland to the UK were 73% higher in Euro terms than at the same time last year.
Meanwhile, Irish exporters suffered an immediate hit after the decision of UK voters to quit the EU. Official figures from the Central Statistics Office show that total Irish exports fell by 11% in July, the first full month after the Brexit referendum.
The UK is Ireland’s biggest trading partner in the EU, but British demand for Irish goods and services has plunged as the falling Pound makes Irish products more expensive for UK buyers. CSO figures show that Irish exports to Britain slipped to €1.08bn in July, a 1.5% drop on their June levels and 3% lower than at the same time in 2015.
David Lamb, head of dealing at FEXCO Corporate Payments, explained:
“It may have rallied a touch this week, but the Pound is still worth 15% less against the Euro than it was on the eve of the Brexit vote. The sterling ‘flash crash’ in early October – in which it lost a tenth of its value in just minutes – shows just how fragile the Pound is.
“As a result British demand for Irish goods and services is shrinking, in what the Irish Business and Employers Confederation has described as a ‘full-blown currency crisis’.
“But while the tumbling Pound is causing mayhem for Irish exporters struggling to sell to the UK, our research also reveals the costs closer to home. With Ireland splurging on UK imports, there’s a growing danger that Irish firms will lose out in the domestic market to a flood of cheaper British competitors.”
— FEXCO (@FEXCOgroup) October 11, 2016