Cross-Border shopping jumps as gap rises between North and South

Cross-Border shopping jumped sharply this year to an estimated €418 million from €385 million in 2016 as shoppers in the South headed north to take advantage of the drop in value of sterling.

The figures, which do not include car sales or online shopping, show cross-Border spending is back at 2010 levels, driven by a 12 per cent appreciation in the euro relative to the pound since the vote by the UK to leave the European Union.

A new report from EY shows an increasing gap in economic fortunes north and south with gross domestic product (GDP) in the Republic forecast to total 4.9 per cent this year, versus a more modest 1.4 per cent for Northern Ireland.

“Both economies are enjoying strong growth in jobs, property prices and average wage levels, though very different inflation levels are creating a divergence in spending power,” according to the report.

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The study forecasts that growth in the Republic will remain relatively strong over the coming years with GDP of 3.4 per cent in 2018 and 3.1 per cent the following year. Growth will then be more modest, falling to 2.9 per cent in 2020 and 2.8 per cent in 2021.

In the North, GDP of 1.1 per cent is projected for 2018, followed by 1.6 per cent the following year. EY estimates growth of 1.7 per cent for Northern Ireland in 2020, rising to 2.2 per cent in 2021.

EY chief economist Neil Gibson told The Irish Times the difference between the two economies was accelerating because of the pressure on consumers in the North where pay rises were not keeping up with inflation.

Impact of inflation

“While you’ve got pay rises of roughly 2 per cent in Ireland, that counts as a pay rise in the South and a cut in the North so the impact of inflation is really beginning to influence the two different projections,” he said.

EY’s report indicates that the increase in cross-Border shopping over the last year helped offset a growing gap in the retail performance across the two economies.

The retail sector is seen to have recovered from the recession with total growth of 14 per cent in the Republic since 2013’s historic lows. EY anticipates that job growth in retail will continue in the South with the addition of approximately 10,500 jobs in the sector between 2017 and 2022, while a decrease of 3,000 is forecast for the North.

“Cross-Border flows are helping bridge some of the divergence. Northern Ireland’s consumer sector would be having a much tougher time if it wasn’t for cross-Border shopping flows and an increase in tourists,” said Mr Gibson.

Overall, job growth has been positive in both jurisdictions with a 12.4 per cent rise in net employment over the last five years.

EY projects growth of 144,000 additional jobs in the period 2017-2020. However, 138,500 of these are forecast to be in the Republic with a projected growth of just 5,800 jobs in the North by 2020.