Sterling’s downward spiral since the Brexit vote and its dramatic dip this week has been a “disaster” for the Republic’s retailers trying to do business close to Northern Ireland – and if the pound continues to tank in the weeks ahead, it will be a very bleak Christmas south of the Border, Dundalk’s Chamber of Commerce has warned.
Sterling breached the 90p barrier against the euro early Friday morning. This time last year, €1 would have bought about 78p, while just before the Brexit vote it would have bought 82p.
Unless the sustained slide in sterling is halted and then reversed, shoppers in the Republic are likely to start crossing the Border in numbers not seen in almost a decade, warned the Dundalk Chamber of Commerce's spokesman Paddy Malone.
“I have been talking to retailers in the town, and they reckon we can live with a rate of around 86p or 87p,” Mr Malone said. “Once it goes beyond that, it starts to have an impact. And when it hits 90p it worries the hell out of us.
“The timing of this could not be worse coming as it does in the run-up to Christmas. It is a disaster.”
Price discrepancies
It is not hard to see why. A cursory look at widening price discrepancies between North and South as a result of the collapse in sterling indicates the severity of the situation for many retailers.
A 790g box of Kellogg's Cornflakes sells for €3.85 in the Tesco outlets in the Republic costs £2.49 in the UK – a euro equivalent of €2.77, based on current rates. Two litres of own-brand milk in the Republic costs €1.49, while 2.3 litres of own-brand milk in the UK costs £1, or just €1.11.
A 280g tub of Philadelphia cream cheese is €3.30 in the Republic and £2.40 (€2.67) in UK. A bottle of Hardys Legacy Shiraz costs €8 in the Republic and £4.50 in the UK, which equates to €5. A packet of 56 Pamper's baby wipes in the Republic is €1.99 but £1.40 – €1.56 – in the North.
The total cost of these five items in a Tesco outlet in Dundalk is €18.20, but a shopper in nearby Newry would only have to spend €13.11 – 28 per cent less. Spread out over the course of a substantial supermarket shop, crossing the Border could easily save about €60, based on current currency exchange rates.
Long-term planning
“We have learned to live with fluctuations both here and in Newry since 1979,” Mr Malone said. “We don’t like it, and it doesn’t help when it comes to long-term planning.”
He did express the hope that shoppers in the South would value their time more than any potential savings.
“Back in 2008 and 2009, the last time there was a serious problem, people from the South were spending three hours queuing to get into Newry. By the time they found parking, they had wasted even more time and petrol. It was a lot of hassle, and people will have to decide if it is worth it.”
Mr Malone called on the Government to use the budget to implement measures to support retailers in Border towns.
“Mind you,” he added, “I am not sure the Government will do anything to help towns like Dundalk. Maybe when retailers in Swords start to complain they will do something.”
