When Irish ice-cream makers Brian and Rachel Nolan launched an ambitious expansion into Britain last month, they were betting on a steady exchange rate easing them into one of the world's biggest food markets. Some of those anticipated returns look set to evaporate after Britain voted to leave the European Union on June 23, sending the value of sterling plunging as much as 13 percent and putting UK-dependent Irish exporters like the Nolans into an exchange rate-induced bind. Ireland, with the fastest-growing economy in Europe, is considered more vulnerable than anyone else in the EU to Brexit, especially the one in ten workers whose jobs directly relate to trade with the United Kingdom. "The scary part at the moment is the currency," said Brian Nolan, 35, who left a career in finance to work with his wife to turn avocados and coconuts into Nobo ice cream in 2012, when Ireland was still relying on an international bailout. "If it keeps going down the wrong way, it makes that market a place where it becomes very challenging to operate in." Like so many firms in a country of only 4.6 million people, Nobo must look abroad for growth. Fourteen times larger than Ireland, Britain accounts for 16 percent of its exports, rocketing up to 44 percent when foreign-owned firms operating out of Ireland are excluded. The exchange rate was more favorable at 0.78 pounds to the euro when Ireland's finance department made its most recent projections but is now 9 percent lower at 0.85. If it fails to recover, the impact could be significant — the department has estimated an average rate of 0.82 over the next six years would cut Irish GDP growth by an average of 0.8 percent a year. For the Nolans, there is no easy answer. Already priced for the premium market, they do not have the luxury of simply increasing prices, and seeking to offset the hit by sourcing cheaper ingredients in sterling could risk sacrificing the quality of raw materials that are key to their brand. The mood in Britain itself is dour. In a special post-referendum survey published on Friday, market research company GfK said consumer confidence fell 8 points to -9 in the aftermath of the June 23 vote from -1 in its previous regular monthly survey. Ireland's government is maintaining its forecast for 4.9 percent GDP growth for 2016 following a strong first half to the year. But it has trimmed its outlook for 2017 to 3.4 percent from 3.9 percent and warned that worse could be ahead if Britain strikes an unfavorable post-Brexit deal with the EU. KBC chief economist Austin Hughes said that the extent of the damage to sentiment in Ireland should be limited in the near term as the early impact will hit external trade and investment, not household spending. But concerns are surfacing in some data. Business expectations in the services sector — which includes tourism operators who rely on the UK for 40 percent of visitors — tumbled in June, according to a survey on Tuesday, as firms expressed concern that Brexit would lead to a slowdown. While Nobo's owners worry that a premium ice cream might be something Britons leave out of their shopping basket at a time of low consumer confidence, Dublin-based online risk analysis company Cloud90 is already seeing investment stalling, as well. "The week of the vote we went into a very large insurance company in London with a very innovative product they agreed to pilot. In the last two weeks, we've heard nothing," said Cloud90 chief executive Nicola Byrne. "We're counting on this, we were planning all our expansion to come from the UK and now we don't know where we are, even with small businesses who we were about to start trading with. The uncertainty is just chaotic, this is a real risk." Irish firms are being encouraged by trade bodies to look to new markets but that can be easier said than done. Byrne said she could look to the United States but differing state laws make the process far more complex for her risk analytics. "We have no idea what the future holds, just none," she said. While Ireland's economy is forecast to be Europe's best performing for a third straight year, it needs all the growth it can get to cut a public debt that, while down from a peak of 124 percent of GDP, stood at 94 percent of annual output last year. Ireland's fiscal watchdog estimates that if forecast GDP growth comes in 1.5 percentage points lower each year, it would cause the debt-to-GDP ratio to stagnate at current high levels before rising again by the end of the decade. That could scupper government plans to grow the workforce by 12 percent to 2.2 billion over the next six years. Experienced exporters like 65-year-old Jimmy McGee, owner of the Athlone Extrusions manufacturing firm, have been through enough downturns to know that difficult times may lie ahead. "I believe this will cost jobs in Ireland. It's just too large," said McGee, who is confident layoffs won't be needed at his firm because it exports sheeting for baths and shower trays to 41 countries other than the UK. "After a tough few years, companies had got the confidence back to invest. That's under threat. There's no stability right now and I don't think there will be for some time."
