Explained: What impact does a weaker sterling have on the Irish?

Pedestrians walk past a board displaying the price of Euro and US dollars against the British pound Sterling, outside a currency exchange store in central London. AFP/Getty Images

Sterling has taken a battering over the last 12 months, thanks to the UK's EU referendum.

This time last year, €1 was worth about 69 pence. Yesterday it touched 88 pence. And expect further weakness. So what impact does a weaker sterling have on Irish businesses and consumers?

Consumers

Let's start with the positive. It's become a lot cheaper to buy UK-based goods now than, say, six months ago.

You get more bang for your euro, as products priced in sterling, such as clothing for example, are cheaper as the euro grows in strength against the pound.

It's also cheaper to take that holiday to London you've been meaning to do recently. But, unless you're going to actively take advantage of the weakness, and either shop or travel to the UK, the impact on you as a consumer is essentially non-existent.

Exporters

It's a very different game if you're a business selling into Northern Ireland, or Britain. It's become much more expensive to sell your products into the UK market, and that means that you've become less competitive.

A survey over the summer of attendees at an Irish Exporters' Association event found that 89pc do business with, or export, to the UK.

Of those, the weakening in sterling had had an impact on almost two-thirds. Business body Ibec has warned that the exporting industries most affected by the sterling fall are typically jobs intensive, and are deeply embedded in local economies.

Farmers

There are fears among the farming community that the UK market may turn away from Irish produce because of the currency issue.

The mushroom industry here in particular is under pressure. About 80pc or more of the mushrooms produced in Ireland go into the UK market. Schiele and McDonald Mushrooms in Tipperary town announced its closure last month, arguing it couldn't cope with the pound's devaluation.

Gerry Reilly, chairman of the IFA's horticulture committee, told TDs and Senators last month that the mushroom industry in Ireland has been thrown into turmoil since the vote.

Tourism

In August, Prime Minister Theresa May wants to encourage UK holidaymakers to opt for 'staycations'. The weakened sterling has already done that, making destinations like London and Edinburgh more appealing. But tourism chiefs here fear UK tourists will think twice before making a now costly trip to Ireland.

The Irish Tourist Industry Confederation has argued that Britain remains Ireland's largest single source market for inbound visitors, with 3.55 million coming in 2015, a market valued at €995m to the economy. Anything that may dissuade UK holidaymakers from coming here would be a blow for the industry.

Border counties and retail

A weaker sterling could significantly damage retailers, but particularly for those businesses in the Border area.

Consumers in Border counties in the Republic could possibly get a better bargain if they shopped in the North. Businesses in the Border counties in the Republic could also lose customers from the North.

Irish Independent