Coveney warns firms over crash-out Brexit as sterling jumps again on hopes DUP will soften opposition to some sort of deal
Tánaiste Simon Coveney has urged firms to brace for a hard Brexit, saying there will be “huge strain on the economy” if no deal is agreed between the EU and the UK.
The Foreign Affairs Minister said food and drink firms were particularly vulnerable to the fallout of a no-deal Brexit, but said he did not believe there would be shortages of supplies if such a scenario played out.
However, Mr Coveney said he remained confident that a deal could be reached and that a hard Brexit would not come to pass.
His comments came as sterling gained again, as investors increased their bets that a no-deal outcome would be avoided.
Capping a good week for the UK currency, sterling jumped almost 1% against the dollar. Against the euro, it traded at 86.60p.
The Iseq index of leading Irish shares rose by over 1%, but the Ftse-100 fell back as sterling gained.
Markets focussed on talk that the hardline Brexiteers, the European Research Group led by Jacob-Rees Mogg, and the Democratic Unionist Party would strike some support some sort of deal.
“The pound has been in rally mode all week, and hints that both the DUP and European Research Group are prepared to back a modified deal have seen GBP-USD leap higher once again [Friday afternoon],” said Chris Beauchamp, chief market analyst at online broker IG.
“This is the reason why the Ftse has, once again, been left out of the rally, but the diminishing prospect of no deal is still evidently driving the pound higher,” he said.
However, Jeremy Stretch, head of Group-of-10 currency strategy at Canadian Imperial Bank of Commerce, said there was a “problem with the sterling bounce” because the EU doesn’t want to put a time limit on the Northern Irish backstop.
France’s L’Oreal became the latest company to say it was stockpiling as part of plans in case the UK crashed out of the EU in March, Reuters has reported.
The company, whose beauty brands range from Lancome creams to Maybelline make-up, is stocking up cosmetics in the UK, its chief executive said.
In his comments, the Tánaiste repeated that a no-deal Brexit would put huge strain on the Irish economy and hit jobs-rich industries such as agri-foods which exports much of its output across the Irish Sea.
“If it impacts on the value of sterling, that puts pressure on the very significant trade between these two islands, there is no question about that. I don’t think there are going to be shortages but certainly there will be cost implications for that trade,” Coveney said.
People should be under no illusion that a no-deal Brexit would cause huge strain on the economy, he said.
We have a very sophisticated food industry in Ireland. We sell billions of euros worth of food and drink to the UK, but we also purchase billions of euros worth of food and drink from the UK. Clearly the food industry would be impacted by the imposition of significant tariffs that would come with WTO rules.
“Of course with potential delays that would come with checks at ports and airports, so we want to avoid that.
“Nobody should be under the illusion that no matter how well you plan in terms of contingency planning for a no-deal Brexit, that somehow through a no-deal Brexit we can protect the status quo and nothing changes.”
