As sterling hit a record low against the euro today the Irish Small & Medium Enterprises Association (Isme) warned the collapse in the value of the British pound has had a disastrous” impact on Irish manufacturers exporting to the UK.
Concern over the UK economy and an expectation that euro zone interest rates are likely to stay higher than British rates sent sterling to a low of 97.98 pence this morning.
A weak sterling results in Irish goods becoming more expensive in the UK, making them less competitive. It also causes problems for manufacturers who are paid in sterling for their goods.
In its end of year statement Isme said sterling has decreased in value by almost 32 per cent over the last 12 months leading to a sharp reduction in the employment and investment in those companies exporting to the UK.
It said small and medium enterprises were facing rising energy costs, currency fluctuations and falling consumer demand with all sectors affected.
The body called for the new national wage agreement that will see wages rise 6.5 per cent should be abandoned and for Government to take firm control on costs imposed on businesses.
Over the last 12 months wage costs had increased over 45 per cent and the average public sector wage now stood at €49,026, some 44 per cent higher than the average industrial wage of €34,018, the association said.