Ministers prepare for drop in sterling if UK leaves EU
CABINET ministers have been briefed about the possible threat posed by a likely drop in the value of sterling if Britain votes to leave the European Union, the Irish Mail on Sunday has learned.
A committee has been meeting at the Department of the Taoiseach for months to prepare for a Brexit. There have also been ‘war games’ in the Department of An Taoiseach and Department of Finance in the event of a ‘Leave’ vote on Thursday.
While two years of negotiations would take place before the UK left the EU, the most immediate effect is likely to be a dramatic plunge in the value of sterling.
Ministers who were briefed by officials last Tuesday agree that sterling is the greatest concern.
‘The immediate impact is what to do with the sterling thing. The effect of a sterling fall on jobs, exports, imports and all that sort of stuff. We don’t know, there is no clear action you can take to stop some of the events,’ said a minister.
‘If sterling falls, Irish citizens will cross the Border to buy cheaper petrol, groceries and alcohol.’
There are serious concerns that exports to the UK would be hit by sterling’s dramatically reduced purchasing power. It would also negatively affect our tourism as it would be much more expensive for the British to come here.
The National Treasury Management Agency has borrowed money for the next 18 months in anticipation of a sterling fall hitting the cost of Ireland’s borrowing.
‘In relation to monies, a number of auctions have taken place already this year and we have done very well,’ said a source at the Department of Finance. ‘They have us prefunded for the next year or year and-a-half. If it (Brexit) was to go ahead, it would take two years.
‘The only thing that would be of immediate concern would be what happens to sterling and what happens with the markets. It would impact on our ability to borrow.’
A government source said last night: ‘Northern Ireland is the leading political concern and free trade is the main economic concern.’