Originally Posted by Marcusm
IN such circumstances, it's likely that legislation would be brought in to force contracts to recognise the newly established currency at a fixed ratio.
And just watch the exodus of foreign firms and the list of Irish firms going bust!
If we left the euro, the punt would have to float against the euro because we wouldn't be able to maintain a fixed exchange rate - if we could we wouldn't be leaving the Euro. In that case, the cost of imported goods such as raw materials but especially energy would skyrocket.
There is no way that Irish employers could afford to simply ignore reality and continue to pay previous rates of pay. There would be an instant and very painful decrease in living standards and you could forget about foreign holidays for a few years as your spending power when you stepped out of the country would be significantly diminished. Dundalk would be a boom town with shoppers from Newry coming over in droves to buy south of the border, especially locally produced food products which would suddenly be very cheap for UK shoppers, the exact opposite of what would happen to the cost of imported food like tea, coffee, bananas etc. in the south.
When we joined the Euro, the exchange rate was set at 0.787564 punts to one Euro so all amounts in contracts were converted at a fixed rate meaning there was no issue in terms of the value of wages & salaries, that would not be the case if we left and floated the new currency.