The Brexit-induced weakness in sterling has led to arise in cross-Border shopping, according to a report by Goodbody Stockbrokers.
The study of traffic flows across the Border provides the first tangible evidence of a Brexit impact on Ireland. It found there has been a notable increase in traffic volumes since the vote, which has accelerated in tandem with the slide in sterling.
In the year to June 22nd, the day before the UK’s referendum vote, traffic volumes grew by 6 per cent, the report found. However, in the period since August, which covers the biggest collapse in the value of sterling, traffic volumes accelerated 9 per cent year-on-year.
The report also detected a 29 per cent increase in traffic volumes going North between 10am-11am on Saturdays, which was described as consistent with a leisurely weekend sojourn from South to North.
The largest increase in the opposite direction was from 6pm-7pm on a Sunday, possibly reflecting a return from a weekend in Northern Ireland.
Republic’s loss
“The fall in the value of sterling is likely to be playing a prominent role in increasing the flow of both tourists and shoppers to Northern Ireland,” the report said.“The benefits to Northern Ireland may be the Republic’s loss.”
However, it noted that while the impact on consumer spending overall in the Republic would be relatively modest, the economic impact in the Border counties is likely to be larger.
The report also highlighted data from the Central Statistics Office (CSO) which showed that on average households in the Republic made one trip to the North over 12 months, but the average for residents along the Border was nine.
Groceries were the most popular purchase, followed by alcohol, with the average spend per trip put at €274, with those travelling longer distances spending more on average to justify the journey time.
Against the euro, sterling rose by 1.9 per cent on Thursday to hit a four-week high of 88.595 pence, having traded above 90 pence last month.
Border retailers
The
Dundalk
Chamber of Commerce has called on the Government to support Border retailers by reducing commercial rates.
In its report, Goodbody said there was very little evidence of the feared shocks to the UK economy so far, with economic growth and consumer spending still holding up. It also noted there had yet to be any major adverse impact on the Irish economy as a result of the UK’s decision.
“Much of this relates to the fact that Brexit will be a drawn-out process, with no real change to the status quo in terms of trading arrangements for some time to come,” said Goodbody analyst Dermot O’Leary.
“However, the scale of the move in sterling is already having impacts on economic activity. Our analysis proves this is the case. We will be watching for any signs of an impact on trade flows over the coming 12 months.”
