Sterling rebound hits construction imports from UK
Firms spending less on imports in move that could have knock-on effect on house prices
Building firms spent about 35 per cent less on UK goods and services in November
Irish construction firms have cut spending on imports from Britain due to a rebound in sterling’s value that could put pressure on house prices locally.
Building firms spent about 35 per cent less on UK goods and services in November than they did for the same month a year earlier, while the final two months of 2017 saw a fall in both the number of import purchases and in the average transaction size.
Fexco’s analysis of nearly 3,000 transactions shows the sharp decline in imports reversed a boom seen in the first 10 months of the year. In the January to October period, the number of import transactions rose 11.5 per cent, while the total spend jumped 171.5 per cent versus the same 10-month period a year earlier.
The reversal came as sterling staged a recovery against the euro, driving up the cost of imports.
The single currency slipped from 93 pence at the end of August to 87.5 pence a month later. In January 2018 it fell even further, sliding to 86.9 pence.
“Irish property prices rose by more than 11 per cent in 2017, and while this is less than pre-crash levels, the red-hot market doesn’t need any extra inflationary pressure,” said David Lamb, head of dealing at Fexco.
“The rapid slowdown in the construction sector’s import spree shows just how sensitive Irish builders are to cost. Those who import regularly from Britain should consider protecting themselves from further falls in the euro by using a forward contract to lock in the current exchange rate for future purchases,” he added.