SANTA'S SPECIAL winter wonderland at the Quay's Shopping Centre in Newry was enjoying an early season rush even before the cut in VAT rates in the UK yesterday.
Santa, who is happy to accept payment in euro or sterling, has seen a major influx of visitors from the Republic since he opened for business earlier this month.
The dual-currency Santa Claus is expecting an even busier festive season at the Quays thanks to the British chancellor's decision to cut VAT from 17.5 to 15 per cent. From Monday, VAT in the North will be more than 6 per cent lower than in the Republic.
Cathal Austin, manager of the Quay's Shopping Centre, does not believe the rate change will have a major impact in attracting more shoppers from the South to Newry. "We have been enjoying a significant increase in cross-Border trade for some time and the most recent spike has been because of the exchange rate between the pound and the euro.
"Large parts of the Republic are part of Newry's natural hinterland so we would expect this trend to continue. Historically, normally 30 per cent of our business would have come from the Republic but this has risen to around 40 per cent in the early part of the week and up to 60 per cent some weekends."
Mr Austin said Newry's reputation as a euro-friendly city has helped drive up the number of euro-transactions now being processed by retailers. "What you find in Newry is that some of the stores and retailers actually beat the exchange rate that is being offered by the banks."
Mr Austin may not be convinced the VAT cut will attract more shoppers from the Republic but there is no debate in Derry.
Fergal Rafferty, centre manager for the Richmond Shopping Centre, believes the VAT cut will help reinforce the already "serious price differential" between the North and South. "We have seen a huge increase in the number of shoppers coming from the Republic in the last six months. The reduction in VAT rates together with the weak pound will make the Richmond Centre even more attractive to shoppers from the Republic.
"We have been very busy really because of the very good exchange rate which is on offer here. Many of our retailers are giving shoppers an exchange rate much better than what they would get from the banks. Some of them are offering anything from 85 pence to one pound in exchange. When you consider the savings shoppers from the Republic are already making with the exchange rate, the new VAT rate is going to make Derry a very attractive proposition."
