Has The UK Pound Had A Negative Effect On Ireland?

Posted by Allison on 16 October 2009, 15:21

As far as currency news is concerned, and how it affects economies in different countries, the British pound has been in the news a lot lately.

It seems to do badly whatever currency you put it up against on the currency converter.  But we always think about those consequences with regard to the UK itself, and we don’t often tend to think beyond that.

But a recent news story online on the Irish website Independent.ie, has pointed out that many Irish businesses are finding the going extremely hard as a result.

Ireland itself uses the Euro now, but it would seem that sterling still has a huge effect on how well or badly Ireland’s exports are doing.  At present they are not in a good place at all, which of course is having a negative effect on the country as a whole.

If the pound continues to fall, the results from exports will become worse still.  It is also possible that they will suffer if sterling remains at around the same level.  And with exports dropping, the number of businesses being affected is very important to note.  With fewer profits there comes the threat of more job losses to follow on from those which have already been experienced.

Following on from this there isn’t much good news to look forward to here either.  There doesn’t seem to be any light at the end of the tunnel at the moment, and this means there is no end in sight to the problems being keenly felt by those who live, work and export from Ireland. 

So when can we expect things to get better?

Well it won’t be anytime soon, judging by the comments received from various quarters.  Previously we could have said that some experts though sterling would be a little healthier by the end of this year – if only by a fraction.  But now even that cautious optimism seems to have been taken off the table.  And it has left us wondering just how much potential there is for a stronger sterling over the longer term, let alone the shorter one.

A lower pound makes exports out of the UK a better prospect.  But even though that is the case, it is disappointing and worrying to think that things could be so different from this in Ireland.  It is not that far away after all.  Jobs are difficult and precarious everywhere at the moment.  But it is certainly the case that companies involved in exporting from Ireland are more at risk from more job losses at present than some other locations are - and particularly in the UK.

Some have also stated that the quantitative easing methods employed by the Bank of England are doing more harm than good.  This controversial method was never going to be welcomed with open arms, but many believe that it is harming the pound and thus having this knock on effect onto the Irish export business as well.

Whatever happens throughout the remainder of this year, there is no doubt that things are unlikely to get much better in the short term.  We must just hope that they will start to improve as 2010 gets underway.  If not, it could be a very painful time in Ireland.