Traders in Londonderry and surrounding towns were today hoping for a major influx of cross-border shoppers as the euro reached its highest value since it was introduced almost a decade ago.
Sterling dropped to a record low yesterday while the euro continued to gain strength.
At the close of business last night a single euro was worth over 81p sterling — a massive rise from 67p two years ago.
The weakening pound emerged as Chancellor Alistair Darling gave his darkest assessment of the economic climate to date, stating that the UK’s prospects are the worse they’ve been since the 1940s in the period at the end of World War II.
In Letterkenny and across Donegal meanwhile, the pound’s fall could spell further hardship for traders, with the strong euro ironically bringing hardship for businesses relying upon cross-border trade coming from Northern Ireland.
New figures released today by the Small Traders Federation in the Republic show that 371 jobs have been lost in the sector in Donegal since January.
The weak pound has also hit Donegal villages and business reliant on tourist trade during the summer, with many holidaymakers opting to stay north of the border, while cross-border workers employed in Northern Ireland but living in the Republic are also set to feel the pinch.
Niall Birthistle, chairman of the cross-border North West Chambers of Commerce, today said that more and more people from the Republic were now taking advantage of the euro’s strength and shopping in Derry and the north in general.
He said: “This is working well for the northern side of the border and is not so good for the Donegal side of the border.
“You can see it now in Derry on any day, the amount of shoppers in supermarkets and shopping centres coming from across the border.
“That is hurting trade in Letterkenny and that is regrettable, but there is always a bit of to-ing and fro-ing.”
He added: “The petrol situation is still benefiting those shops and traders along the border.
“There is two-way traffic, although at the moment it is certainly benefiting traders in the northern side more.”
Mr Birthistle said that part of the problem was that supermarkets and shops south of the border were not converting the stronger euro into more competitive prices.
“Prices have been shown to be quite high,” he said.
“The benefits now need to be passed on.
“In the short term traders will have stock they bought at the older price and will have to get the higher price back for it.”
He added: “These things always balance themselves out.
“There is always a short term movement and in the longer term retailers in the south will get the benefit from the strong euro and will have to show the benefit to their customers.”
The pound also dropped dramatically against the dollar yesterday, with £1 now the equivalent of $1.7996.
Last month the pound achieved its biggest fall against the dollar since its ejection from the European Exchange Rate Mechanism in 1992.
Figures revealed the UK economy stalled in the second quarter and the housing market was experiencing its sharpest collapse since the early 1990s.
New figures from the Bank of England, meanwhile, showed that UK mortgage approvals dropped to a record low of 33,000 in July, raising further worries over the potential depth and length of the housing market correction.