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Republic of Ireland's VAT hike could see shoppers flood north again

The streams of people from the Republic coming to Northern Ireland to shop have dried up in the past two years.

But they could flow again when the Irish government officially announces a VAT hike.

Northern Ireland retail footfall dropped 5% this year, says the British Retail Consortium.

Meanwhile, a survey found that while small price differences remain, they are a fraction of what they were in 2009.

But tomorrow's expected Vat increase in the Republic from 21% to 23% is set to widen the gap again, unless retailers down south absorb some or all of the hike.

Retail Ireland Director Torlach Denihan said: “A 2% increase may not in itself be enough to drive people north to shop, but if they increase excise duty on alcohol as well and there is any negative change on exchange rates, it would be really dangerous.”

The pay-off for cross-border shopping trips for the Republic’s shoppers is small, particularly when petrol and road tolls are factored in.

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For popular cosmetics gifts at Debenhams, the price gaps were generally between 7% and 10%.

The biggest differential found was for Gucci Guilty Intense perfume 30ml costing £31.66 (€36) in

Debenhams Newry branch on November 25, compared with €47.08 (£40.50) at their southern outlets. Back in 2009 a similar survey found the price differential between Debenhams' prices north and south was 40% on most items.

The price gap at Argos meanwhile, is generally less than 10% for popular toy and gift items. One of nine items surveyed there was cheaper in the Republic.

A Sony Bravia 32” TV retails at £379.99 (€442) in Argos Newry compared with €459.99 (£395) in Argos Dundalk — a difference of just 3%.

In a basket of goods at Dunnes Stores, seven items were cheaper in Dundalk than in Newry, while 11 were dearer, although the differences were fairly insignificant.

By far the biggest price gap was for a tin of McVities Victoria biscuits — which retailed at €14.99 (£12.80) in Dundalk compared with a standard £5.99 (€6.99) in Dunnes Newry and a temporary special offer of just £4 (€4.65).

In general the price differences for groceries and other items surveyed were significantly lower than in 2009, when there was a double-digit gap for most items.

The southern hike is expected to take effect from January 1, 2012.

Retail Excellence Ireland said at the very least, Dublin should phase the Vat hike in by 1% next year and 1% the following year.

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