PORTLAND, Maine — The United Kingdom’s surprising vote Thursday to leave the European Union sent its national currency, the pound sterling, tumbling to a 30-year low. If that holds, it could put a dent in exports to the country, according to Maine’s top trade official.
Janine Bisaillon-Cary said Friday morning the immediate reaction to the “Brexit” vote does not bode well for U.S. exporters, as the pound sterling’s fall against the dollar makes U.S. goods more expensive there. The UK was Maine’s ninth-largest export market in 2015.
“If the dollar gets too expensive, then that makes our products all the more expensive to purchase,” Bisaillon-Cary said.
The markets responded sharply Friday morning, but she said the longer term trend for the currency will hold more telling signs for Maine exports to the UK.
Melissa Smith, CEO of the fuel card company WEX, said in an interview Friday that despite polling that was 50-50, the market reaction to the vote demonstrates the surprise.
For WEX, which in 2014 acquired a majority stake in ExxonMobil’s European commercial fuel card business, Smith said she doesn’t expect the move to have an impact on its business.
“I think the bigger question is how it’s going to affect the world economy, and that’s what the market is nervous about right now,” Smith said.
Already this year, Maine exports to the UK are down, falling below direct exports to the Netherlands, Belgium and Hong Kong, through April.
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Last year, Maine exports to the UK were valued at about $55 million. So far this year, they are off by about $7 million, or one-third. That’s driven primarily by a drop in last year’s top export of aircrafts, engines and parts and diagnostic laboratory chemicals.
Amid that overall decline, prepared potato exports are up sharply, according to data compiled by wisertrade.org, at about $1.3 million through April, compared with $310,000 at the same time last year.
Bisaillon-Cary said the vote came as a surprise and that people she’d spoken with involved in business and trade were strongly in favor of the UK staying in the EU. The process of exiting is expected to take at least two years and marks the first departure of a member country.
Bisaillon-Cary said the sense among exporters in Maine was that the vote would land the other way, but she hadn’t yet spoken to businesses trading with the UK as of Friday morning.
Dan Bookham, former executive director of the Penobscot Bay Regional Chamber of Commerce and a native of Britain, said he was sad about the vote that would be “socially and economically ruinous” for the country.
“I think it will be a while for all the economic and trade implications to sink in,” Bookham said.
U.S. firms will lose a key entry point to the EU, he said, which is the largest free trade area in the world.
Bisaillon-Cary agreed that the vote could affect the UK’s ability to attract foreign investment. At the same time, she said that could drive some UK-based companies to invest more here.
As of the end of 2015, there were at least eight UK-based companies invested in Maine.
Four are in Portland and include the engineering consultancy AMEC; Citizens Bank, a part of the Royal Bank of Scotland; HIL Technology, subsidiary of Hydro International that makes waste and stormwater treatment technologies; and business intelligence firm Quantrix, a subsidiary of IDBS.
The other firms with UK ties or ownership are Porvair Filtration Group, in Caribou; Tate & Lyle, which has a potato starch manufacturing facility in Houlton; industrial metal fabricator WahlcoMetroflex in Lewiston; and Hunting Dearborn Inc. in Fryeburg.
The repercussions of the vote also could lead to a division within the UK, as leaders of Scotland and Northern Ireland have expressed a desire to remain a part of the European Union.
If those countries negotiate a way to remain within the EU, Bisaillon-Cary said, it could add to the existing tax benefits in Ireland for companies setting up foreign operations.
As the EU, financial markets and international business community ponder those questions, she said the next move for Scotland and Northern Ireland is a little beyond having a major impact in Maine.
BDN staff writer Stephen Betts contributed to this report.