UK elections: the view from the Republic of Ireland

From an Irish business perspective, the result of the UK General Election is not good news – it only adds to the uncertainty surrounding the UK’s economic future and the nature of its Brexit – with knock-on effects for Ireland. 

Domestically, the Irish Republic has recently enjoyed some positive economic news. The Purchasing Managers’ Index to the end of May was encouraging for both the manufacturing and service sectors. Retail sales were up over 6% year-on-year and unemployment reached a nine-year low – falling to 6.4% and trending downwards. 

However, Ireland is affected by what happens in the UK and the General Election result has done nothing to strengthen Sterling. If the pound remains as weak as it is – or even weakens further – the fear is that this could have damaging economic consequences for the Irish Republic. Exports to the UK could be negatively impacted. Some businesses may be able to drop prices slightly to remain competitive, but exporters where margins are already tight will have little wriggle room. 

The weaker pound is also likely to affect the retail sector: we could well see consumers flowing across the border into Northern Ireland, while also making more online purchases sourced from the UK. Tourism could be damaged too, as the higher cost of visiting the Republic may deter some people from planning a holiday in Ireland.  

As for Brexit, it is still unclear what a weakened Conservative government will mean in terms of whether the final deal is ‘hard’ or ‘soft’. With negotiations only just beginning, this may become clearer in the near future. Many in the Republic will be hoping that the outcome is at the softer end of the spectrum.