Irish shares suffer another €2bn collapse in value as sterling tumbles
Irish shares had €2bn wiped off them yesterday, with losses accelerating as British Prime Minister Theresa May spoke in a raucous House of Commons.
The Iseq index is now close to the lows seen after the Brexit vote in June 2016, after Mrs May announced plans to delay a parliamentary vote on whether to accept her Brexit deal.
In total, the index lost more than 2.5pc of its value, with Irish banks AIB, Bank of Ireland and Permanent TSB all hit.
But it was a worse day for Ryanair, Smurfit Kappa and CRH, which lost 5.07pc, 4.92pc and 3.51pc respectively.
The pound fell as much 1.6pc against the euro yesterday – its lowest level since August – after Mrs May postponed the vote on her Brexit deal.
By the close of trading in London the pound was trading at 90.44 pence per euro, off its day low of 90.84 pence per euro.
Mrs May hopes to go to Brussels and extract a better deal, especially on the Northern Irish backstop, although the EU has said the terms offered were final.
“And with time running out, the chances of a no-deal Brexit have arguably risen,” said Ruth Gregory, senior UK economist at Capital Economics.
Following yesterday’s climb-down by Mrs May, Ms Gregory put the chance of the UK crashing out at around 40pc.
If Britain leaves the EU without a deal, Ireland will be hit particularly hard. Consultancy Copenhagen Economics said a no-deal Brexit would lop 7pc off potential economic growth here by 2030, more than double the 3pc it forecasts for a negotiated deal.
For the UK, Brexit has been anything but the boon promised in the referendum.
“Sterling has been eviscerated, economic growth has slowed, domestic companies have moved staff abroad and uncertainty has become the only certainty,” said Olivier Desbarres of consultancy 4X Global Research.
Meanwhile, emergency laws will be needed here in the event of a no-deal Brexit to maintains some economic activity on a solid legal basis, employers’ group Ibec has warned.
It is calling on Government to ramp up preparations for a crisis Brexit as the political situation at Westminster deteriorates.
Ibec CEO Danny McCoy said businesses and jobs are on the line because of the growing risk the UK could crash out.
“The risk of ‘no deal’ is rising. If the UK crashes out of the EU, there will be immediate and far-reaching economic consequences. An extended transition period is vital in all circumstances.
“Ireland’s unique economic exposure to Brexit will demand very specific treatment. Emergency laws will be needed to put certain economic activity on a firm legal basis. Keeping transport links and supply chains moving must be a priority. The majority of Ibec members have contingency plans in place, but companies urgently need more information.”