Weaker sterling will make cross-Border shopping attractive

Prices of UK retail products may become cheaper

Mark Paul and Joe Brennan look at how Brexit will affect the Irish economy.

 

For the Irish consumer, Britain’s decision to opt out of the EU is likely to have profound consequences for travel, health, cross-border shopping trips and even the prices on supermarket shelves.

While a future trading relationship between the two countries may be brokered, the UK’s departure from Europe and, consequently, its trade rules, will have an impact. The question is: to what extent?

Whether online or physically crossing the border (despite the potential for checkpoints), a weaker sterling will make Northern Ireland prices attractive.

Clothes bought in the UK could become cheaper. A 2013 report from the independent House of Commons library appeared to conclude EU membership increased their cost and that of many other consumer goods.

UK retailers will be freed of the more absurd regulations emanating from Brussels. Shoppers in the North can bypass, for example, a ban on “powerful” vacuum cleaners above 1,600 watts.

Negative

In the Republic though, the value at UK retailers could see more negative effects. Dermott Jewell of the Consumers’ Association of Ireland (CAI) said familiar high-street names will feel the pinch of leaving the single market.

“There is every likelihood that we are going to see in some size or shape a change in pricing structures for various products and UK based chain providers,” he said, noting Tesco as a household-name example.

“They are not Irish, they are British. Their price structure will emanate directly from their purchasing power and I am not just picking on Tesco, there are many of them.”

There is little to go on ahead of actual Brexit negotiations, Mr Jewell said, explaining once the UK sheds legislatively based trade provisions, “anything can happen”. Retailers may simply lower their prices.

The Irish consumer could also be lured into crossing the border. “We always tell consumers to shop around – we never really tell them to go across the border but they will go where prices are of value to them and easily attained,” Mr Jewell said.

But Brexit could also impact on freedom of travel. Whatever Ireland’s distinctive relationship, borders were at the heart of the vote.

Despite being introduced in 1925, the Common Travel Area between Ireland, the UK, the Isle of Man, Jersey and Guernsey, could be compromised by the split.

Health

Flying to the UK could become more cumbersome – today, travel with Aer Lingus requires only a driver’s licence or student card in place of a passport. That may change.

Irish citizens travelling in the UK could avail of free health care under the European Health Insurance Card (EHIC) scheme but this is set to disappear along with all the other EU trappings and the effects are, of course, unclear.

There is the potential for it to impact on education too. The UK has long been a top destination for Irish students looking to pursue particular courses, or for those who missed out on the points to study at home. Thousands still cross the Irish Sea to study every year but this may change in the event of separate fees for “foreign students”.

At best, the impact of Brexit on consumers is solid guess work, but there will be some impact.

“Competition is always going to play a massive part and it’s a fairly competitive market out there at the moment,” Mr Jewell said. “It should hold but it’s very hard to call it.”