Cross-Border Shopping Bonanza Accelerates

There has been a prediction that cross-border shopper spending will hit a total of €700m this year.

There's no stopping the flow of trade north as - despite the recession - the shopping exodus continues.

Experts now also say that it will cost the Irish Republic's Exchequer up to €143m in lost VAT, excise duty and corporation taxes.

The Central Statistics Office (CSO) report for the Department of Finance, revealed that shopping across the border will increase by some €150m to €700m in 2009.

The report says the loss in VAT revenue could be as high as €72m this year. Excise duty could be upwards of €40m with the loss in corporation tax revenue as high as €31m.

This comes on top of a €114m loss last year in VAT, excise and corporation taxes because of shopping across the Border, according to CSO estimates.

Only last weekend, Irish Finance Minister Brian Lenihan admitted his decision to raise the VAT rate had been a "serious mistake" and had "sent out the wrong signals".

Last October he increased it from 21%c to 21.5%, while the British government cut its rate from 17.5pc to just 15pc.

Northern Ireland has been 'coining it' ever since, especially as the near simultaneous 30% drop in the value of Sterling was the main reason for shoppers heading north to take advantage of substantially-reduced prices, the CSO found.

The resulting pre-Christmas bonanza in trade to Newry, Banbridge, Lisburn and Belfast has, according to the report, not slackened.

Cross-border shopping totaled between €210m and €240m in 2007.

In compiling its report, the CSO used data from Sainsbury's and Asda in Northern Ireland and collected information from supermarket chains in the Irish Republic.

An added complication is the fears raised by a recent National Consumer Agency survey in the Irish Republic.

It was also cited by the CSO as showing that "price matching, rather than price competing, was found to be common among retailers in the Republic."

"This suggests that profit margins of the large supermarket chains are higher in the Republic, as less competition implies higher profits, and therefore is likely to be another factor in higher prices in the Republic," the report said.

See: Border Budget Bonanza For NI