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Greece fallout 'could affect our exporters', says PwC chief economist


Worrying message: PwC's chief economist Dr Esmond Birnie

Worrying message: PwC's chief economist Dr Esmond Birnie

Worrying message: PwC's chief economist Dr Esmond Birnie

Northern Ireland's exporters could be in for increasingly tough times ahead amid fears the euro could tumble further following the Greek election result.

Greek anti-bailout leftist party Syriza swept to victory in a snap election, with its leader Alexis Tsipras promising that five years of austerity were over.

The left-wing party wants to renegotiate the terms of its massive bailout and slow its austerity cuts.

And it's this, the uncertainty over Greece's position in the eurozone, and fears the nation could default on its debts, that could see the euro plummet yet further.

And it's Northern Ireland's export businesses which will suffer from an "almost certain" decline in the strength of the euro, according to PwC's chief economist Dr Esmond Birnie.

"The more serious negative impact will be in terms of our exporters," he said. "A number of sectors could be particularly sensitive to the fluctuation in the exchange rate - that would include food processing and parts of the manufacturing sector.

"Where businesses here are selling to places such as major supermarkets in Great Britain, they will be competing with those in the Republic.

"As we know, profit margins have already been squeezed, and now there is this further price competition."

According to Bank of Ireland economist Alan Bridle, the euro will "likely stumble on" in the face of the fallout of the Greek election and quantitative easing (QE)

"Those in the euro area are in a period of uncertainty -and the impact of QE could exacerbate things more here," he said.

"Things are likely to remain weak - benefiting consumers, but not the producers."

The action, intended to kick-start the stagnant eurozone economy, will start in March and continue until the end of September next year.

Politically, the new coalition between Greece's left-wing election victors Syriza and the right-wing Independent Greeks has been described as the "worst possible outcome" for the country's troubled economy.

Prime Minister David Cameron said that the Greek result was a "warning sign" of possible economic turbulence to come.

There are already fears an ever-strengthening pound versus the euro could have a drastic impact on Northern Ireland's own tourism industry, as travellers choose to stay within the eurozone in order to make their cash go further. But in the short term, consumers and those holidaying in Europe, will see their pound go further, with trips costing less overall.

Meanwhile, Mash Direct's Martin Hamilton said the company was "hedging" and planning ahead to avoid any negative impact from the weakening euro.

"While it's not a direct problem, it's something you have to be aware of," he said. "There are so many facets you have to be aware of, and it's another you have to keep on top of."

Belfast Telegraph