Hi °C | Lo °C Northern Ireland's economy was boosted by half a billion euros (£450m) last year — just from Southern shoppers buying groceries.
New figures released by Tesco come with the admission that the Republic's grocery trade has taken a 4% hit thanks to cheaper prices here.
The startling statistics follow a recent announcement by the supermarketof a 5.2% increase in world profits to €3.15bn for the year to the end of February.
The effect on the Irish economy of shoppers heading across the border to places such as Londonderry, Strabane, Enniskillen and Newry was recognised in the South’s Emergency Budget earlier this month.
Duties on petrol and alcohol were left unchanged in an attempt to curb the vast number of consumers who are taking their trade across the border.
But now that Chancellor Alastair Darling's 2009 Budget has promised a 2% hike on items such as alcohol and tobacco products — effective today — there has been speculation that Northern Ireland may become less alluring for some shoppers.
However, with the cost of fuel still cheaper in the south — where diesel is, on average, a staggering 18p a litre less — only time will tell if the new levies will significantly curb the cross-border flow of traffic.
Releasing the fresh figures earlier this week, Tesco said that lower prices, the UK’s lighter VAT rate and the weak value of sterling were responsible for the loss of 4% of the Republic’s €12bn retail and grocery trade into the north. It added that cross-border shoppers spent €450m to €520m (£405m-£468m) in Northern Ireland last year, the vast bulk of which was spent on groceries — an estimate based on a recent Irish Revenue Commissioners and Central Statistics Office report.
It seems the gigantic grocer has not been able to compensate by higher sales in Northern Ireland, as it does not have a strong presence in border towns such as Newry and Enniskillen.
Rivals such as Sainsbury’s and Asda have, however, benefited from an unprecedented influx of so-called ‘euro-tourists’.
A spokeswoman for Sainsbury’s said the economic downturn has increased what has always been a steady stream of southern shoppers through its doors.
“As the recession has taken hold, the number of these cross-border shoppers has climbed steadily thanks to the favourable exchange rate and the fact that customers are now prepared to travel further to purchase goods at low prices,” she added.
Meanwhile, an Asda spokeswoman said that business was booming at its border stores with southern shoppers accounting for nearly 40% of total trade.
“Our stores in Enniskillen and Strabane have continued to enjoy increased sales due to strong cross border trade. Euro-spend accounts for almost 40% of both store’s total sales as shoppers take advantage of our full offering, saving an average of 30% on their weekly shop compared to prices in the Republic,” she said.
Tesco has turnover of €3bn in Ireland and just over a quarter share of the market, so a 4% drop in business would cost them approximately €120m.
They have seen increases in sales of clothing, bakery, fish and meat, whereas alcohol and household sales have dropped.
Last December, ahead of the UK government's 2.5% vat cut, a Belfast Telegraph investigation exposed colossal cross-border savings, where clothes, babycare products and other items were up to 30% cheaper in Northern Ireland.
