The impact of Britain’s recent referendum on EU membership is already being felt as the Irish manufacturing sector dips to its weakest level in a period of growth that has lasted for more than three years. In an unexpected and marginal ‘leave’ victory, the referendum has been taken to heart by the British government, who have given little in the way of information or assurances to those affected by the decision to accept this advisory referendum as policy.
Ireland, as a member of the EU, is not bound by the decisions taken at Westminster, which are already driving manufacturing companies to alternative destinations. However, due to the importance of the UK as an export destination for Irish manufacturing, some of the negative impact will unavoidably be felt here.
1. Impact on prices. The implications of the Brexit vote on the Irish manufacturing sector are likely to include increasing pressure on the manufacturers to reduce the prices of their output. The poor exchange rates, due to the decline in the value of sterling, and the climate of uncertainty looks set to push product prices down at this stage.
2. Negative climate. The referendum result has caused shockwaves across the world, and the immediate financial impact of the situation has reached beyond the shores of the UK. As a closely related trading partner, Ireland will feel the strain of the political climate of uncertainty, and further drops are predicted before the situation improves.
3. Long term implications. This news may be disheartening after the positive development of the sector over the last three years, but experts suggest that this will be a temporary situation. Although outcomes are unknown at this stage, there may be the potential for Ireland to develop its own relationship with the EU to its advantage, and the strength of Ireland’s Employment index and its manufacturing industry give reason to be optimistic in the long term.
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