Derry's cross-Border shopping bonanza

BELFAST BRIEFING:TILLS HAVE been ringing in Derry long before there was even a hint of the festive shopping season in the air this year.

It does not take the bright lights of Christmas decorations or gaily adorned trees to entice thousands of shoppers across the Border with their euro these days. All it needs is a slight surge in the euro exchange rate against sterling and the promise of a bargain or two and it is Christmas every day for some lucky retailers in Derry.

Rising unemployment, the credit crunch and falling house prices in Northern Ireland have made consumers nervous in the North and Derry is no exception. One of the city's major manufacturers, Dupont, has confirmed plans to close its factory over Christmas for four weeks because of a fall in demand for its products.

Seagate, one of Derry's largest employers, has asked workers to consider taking extended leave or unpaid holidays over Christmas because it has built up an excess of surplus stock. Calcast, a subsidiary of French car components group Montupet, has just also axed 90 jobs in the city.

Any of these developments could have had a serious impact on Derry's retail trade but there is no sign that traders in the city are struggling for business. In fact, it is quite the opposite.

A quick tour of the car parks of two of Derry's larger shopping centres highlights exactly why the city is buzzing while the local economy is struggling. Both the Richmond Shopping Centre and Foyleside Shopping Centre have one thing in common in their car parks - lots of cars from the Republic.

Retail bosses believe the new UK VAT rate which came into effect yesterday will help attract even more shoppers from across the Border. The VAT rate has dropped to 15 per cent in Northern Ireland until the end of next year.

Des Farrell, centre manager of Foyleside Shopping Centre, says the new rate could mean one of the busiest Christmas periods yet for retailers in the city.

"We saw a big increase in the number of people coming from the Republic since the summer with the weakened sterling and stronger euro."

The president of the local chamber of commerce has no doubt that retailers across the city are cheering the new VAT rate. But Ian Crowe is not convinced that it is such a good move for other businesses. Crowe, who has business interests in Derry and Donegal, believes that, in a time of crisis, companies naturally become more competitive.

Crowe has been in business with his firm, CPC Office Supplies and Interiors, for 24 years.

He does not believe the British government has taken into account the potentially negative impact the VAT rate may have on some business owners who have worked to build up their companies.

Crowe says he is convinced that the cut in UK VAT rates will leave retailers in the Republic at a disadvantage. "I work on both sides of the Border and we in the chamber work very closely with our colleagues in the Letterkenny Chamber of Commerce and we see at first hand how the weak pound has impacted on their business.

"Their businesses were already suffering because of the good exchange rate and the VAT cut is not going to help them and we do empathise with them because of their situation. I personally support the concept of keeping business local - but the fact is there are great bargains to be had in Northern Ireland for euro shoppers."

He says there "is too big a differential" for cross Border consumers to ignore and the increased trade is very good news for Derry's retailers. But Crowe is concerned that, in the long run, the delicate balance of good trade relations could be significantly altered.

This year retailers in Derry are getting ready to say a big thank you again and again and again to cross-Border shoppers - without them Christmas simply would not be the same this year.