Dáil Éireann debate -
Tuesday, 23 Jan 1996

Vol. 460 No. 3

Written Answers. - Currency Exchange Rate Effects.

Batt O'Keeffe

Question:

102 Mr. B. O'Keeffe asked the Minister for Finance if he is concerned at the impact on exports of our currency value against sterling and the fact that some manufacturers are moving processes or entire production to the United Kingdom, thereby causing job losses in Ireland. [19148/95]

Minister for Finance (Mr. Quinn)

I am conscious of the concerns of exporters to the United Kingdom about the impact of the higher exchange rate of the Irish pounds against sterling. However, I would point out that the change in the value of Irish pound against sterling is due to the weakening of sterling in international markets and has occurred despite the different evolution of interest rates here compared with the UK over the past 18 months or so, such that Irish interbank rates are now about 1 per cent below corresponding UK rates. In addition, the weakness of sterling is providing offsetting benefits for some exporters, in terms of lower import costs; furthermore, the Irish pound has depreciated against the Deutsche Mark and certain other currencies, a factor which should be of advantage to exporters with markets in various EU member states other than the United Kingdom.

I am not aware that manufacturers are moving processes or production to the UK as a result of the Irish pound's exchange rate against sterling. As the Deputy will be aware, decisions on where to locate production are clearly made for reasons other than exchange rate movements alone. Other factors are bound to come into play, including, for example, likely developments as regards economic growth, inflation, wages, interest rates, suppliers' costs, levels of diversification to other markets, etc.

It is primarily a matter for exporters themselves, along with their employees, suppliers, etc., to cope with the economic environment in which they find themselves. Of course, the Government has a role in helping to make this environment as conducive as possible to economic activity, including exporting: in this context I would point out that the economic environment in Ireland is characterised by high growth, low inflation, interest rates at historically low levels, high levels of investment under the National Development Plan and moderate wage developments in line with theProgramme for Competitiveness and Work, all of which are of benefit to exporters. Moreover, in the 1995 budget I introduced measures in the tax and PRSI areas partly designed to benefit Irish industry with markets in the UK, while the 1996 budget which I am announcing today, as the Deputy will see, has also been framed with the needs of the Irish economy generally, including those of exporters to the UK, kept fully in mind.