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Southern shoppers flood north as Irish retail sector falters

Turning his back on Cumbernauld for Ireland at the start of the Celtic Tiger boom was a breeze for Dougie Stewart.

When it was party time in the Republic, his specialist wine store was shifting pallets of plonk and Champagne by the caseload. These days, though, the fizz has gone out of his business.

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The problem isn’t just the rapid meltdown of the Irish economic miracle but the fact that Stewart’s store, the Red Island Wine Company, is located in the east coast town of Skerries, less than an hour’s drive from Northern Ireland. Today, when they load up on booze, many of his previously loyal clientele make a beeline for the border rather than drop by for some craic with the Caledonian connoisseur.

Almost half of all alcohol being sold on the entire island of Ireland at present is being sold in the North despite its relatively small share of the overall population. Citizens of the Republic, it seems, are drowning their economic sorrows with British booze. “I’m not the worst affected because I’m in an upmarket niche,” says Stewart. “But the regular off-licenses and supermarkets have been hit for six.”

Some 250,000 southern households now regularly cross the border to shop and the figure is set to increase markedly during the crucial Christmas sales period, resulting in a leakage from the recession-bound Republic of almost

€1 billion this year and a retail boom for the British province.

Irish shoppers are flooding north to fill their car boots with not just alcohol but food, clothing, toys and electronic goods. Nappies are shifting fast off northern shelves since the Republic is in the midst of a baby boom.

The trend got underway this time last year after VAT was slashed to 15% in the UK and almost simultaneously raised in the Republic to 21.5%. But, a real exodus has occurred in recent weeks as the value of the pound has plummeted.

A euro now trades for 90p and some northern shopowners have even scrawled €1=£1 on their windows to drum up still more trade from the south. Needless to say, this is proving disastrous for retailers in the Republic, especially in the border regions.

Eire’s difficulty is proving Northern Ireland’s opportunity. At weekends there are so many queues in the Quays shopping centre, a glitzy new mall on the canal basin at Newry, Co Down, you might imagine there had never been a credit crunch. Cast your eye across the number plates in the car park and you soon see why: about half the vehicles are southern-registered.

Paul and Miriam Fox, who run a yoga studio in nearby Co Louth, jump into their little red sports car every Sunday to do their weekly shopping at the Quays or at the nearby Buttercrane centre, which is equally busy despite its dated condition. As they flit between these two malls, the Foxes turn a deaf ear to politicians in Dublin who have branded cross-border shopping unpatriotic.

“When I’m on the same sort of expenses as they give themselves in the Dail, then I might be able to afford to be patriotic,” says Paul. Miriam, originally from Northamptonshire, chips in: “Even supermarket managers down in Drogheda go north to shop, and they’re on staff discounts.”

Even further north in Lisburn, a traditionally loyalist stronghold eight miles east of Belfast, the big stores are filled with southern accents. Most Dubliners wouldn’t have dared come here during the Troubles. But they’re perfectly relaxed these days picking up bargains from Ulster Protestants, who are equally eager to grab their euros.

A punitive foreign exchange rate is a massive pain also for Ireland’s exporters, particularly in the food and drink sector, where reliance on the UK market is still around 40% (compared to 20% for Irish exporters in general).

“No other exporting sector in Ireland has the same degree of exposure to sterling,” commented Paul Kelly, director of Food and Drink Industry Ireland, who has called for government action to protect a sector that has already shed 9,800 jobs because of the shopping trends.

The euro’s near parity with sterling is taking a toll too on Irish tourism. Hotels and nightclubs in Dublin’s trendy Temple Bar district – a mecca for British stag nights and hen parties throughout the Tiger years – have never been so eerily quiet.

The Irish Business & Employers Confederation has been calling for a cut in VAT and excise duties to assist southern businesses.

IBEC contends that government policy accounts for most of the massive north-south price gap. The taxman in the Republic takes €15.59 of the €25.99 price tag on a 70cl bottle of Irish whiskey, but the UK taxman takes under €10 of the €18.82 price tag there – meaning tax accounts for almost 80% of the price differential.

The Tanaiste (deputy premier) Mary Coughlan maintains the weak pound is the main problem and that is beyond Dublin’s control. But, she is clearly concerned that the Irish exchequer could lose out on €400 million in revenues this year as a result.

Still, although it has another important budget scheduled, the Irish Government seems unlikely to take any drastic action to stem a haemorrhage that will cost its economy an estimated €810m this year.

“What I don’t want to see this Christmas is people moving north in order to carry out their purchases,” she says. “We have seen a considerable reduction in the price of goods and services so that people can see better value for money.”

The price of groceries has fallen by about 20% in the Republic in recent months as deflation has set in, but southern shoppers can still save up to a third on many items by crossing into the North.

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