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Border shops braced for Republic rush

By John Downing

Published 05/07/2016

George Osborne
George Osborne
Michael Noonan

Shopping centres in Northern Ireland's border areas could be in for a bonanza in the wake of the UK vote to leave the EU, according to a senior Irish civil servant.

Sterling has weakened since the Brexit vote last month, making Northern Ireland more attractive as a destination for shoppers in the Republic to stock up on groceries or other items.

At the time of the vote, €1 bought about 76 pence in sterling. Now it's buying around 83p.

The fall in sterling may well lure shoppers to Northern Ireland, according to John Palmer, Principal Officer at the Republic's Department of Finance.

Shoppers flocked to Northern Ireland in 2009 when the euro neared parity with sterling at one stage - creating havoc for the retail trade in the south and becoming a big political issue.

Yesterday, Mr Palmer expressed concerns that there could be a repeat, with the amount of VAT collected in the Republic plummeting as Irish shoppers cross the border in significant numbers again.

"There will be an impact. What's hard to tell is how much and that's something we'll be looking at in the context of the forecast for the Budget," said Mr Palmer.

"We would expect, later on in the year, and again it depends on the strength of sterling, that we will probably see some linkage across to Northern Ireland in terms of VAT, and people go and shop there."

International research group Kantar Worldpanel also warned that the Republic's grocery shoppers might drift to Northern Ireland due to weakening sterling.

It comes as both the Dublin and Belfast governments have tried to play down the potential impact of George Osborne's plan to cut UK company tax to 15% in efforts to stave off recession in the wake of Brexit.

Irish Finance Minister Michael Noonan said the Chancellor had two years ago signalled a phased cut to 17% - and the move from 20% to 15% was not much below that earlier target.

Mr Osborne's move is an attempt to keep investment in Britain after the shock referendum decision on June 23 for the UK to leave the EU.

Speaking after North-South government talks at Dublin Castle, Taoiseach Enda Kenny conceded that the move would have implications for both parts of Ireland. But Mr Kenny said other factors influenced investors decisions and both the North and the Republic had been successful in attracting business investment.

"Obviously, there are implications here both for Ireland and Northern Ireland," Mr Kenny said. But he added that the gap between the Irish and British rates could be influential for business decisions also.

However First Minister Arlene Foster said the move could in fact help Northern Ireland - even if it continued with cuts down to the 12.5% planned for Northern Ireland in spring 2018. This is to match the Irish rate.

Ms Foster said a fully-fledged move for a 12.5% company tax rate all across the UK could save Belfast the expense of taking control of company tax.

Belfast Telegraph

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