The growing disparity between the Irish pound and sterling has had a considerable impact on retailers in The Republic. British chainstores which moved into the Irish market during the 1990s have been especially hard hit as they try not to pass on the difference to consumers here.

However, they also report some benefits, particularly the increase in tourists travelling to Ireland from Northern Ireland and Britain to take advantage of lower prices.

While the exchange rate between sterling and the pound has fluctuated for many years, only since the latter became formally linked to the euro at the beginning of last year did the disparity become extreme.

The euro's poor performance against other currencies, and specifically against sterling, has obviously affected business with Ireland's nearest and biggest trading partner.

At the end of last week, the pound was worth around 76 pence sterling. The retailers suffering most from this differential are those maintaining pound/ sterling parity in their pricing.

The English department store chain Debenhams, for example, which opened in Dublin's Jervis Centre in November 1996, has always carried the same price tags in Britain and Ireland.

"We don't want to get into price differentials within the group," a spokeswoman said. Therefore, Debenhams would continue to absorb the discrepancy in value between Irish and British currencies because "we're fully committed to our store in Dublin and don't want to hit our customers". The Jervis Centre outlet has been one of the best-performing stores in the Debenhams group over the past three and a half years and this has clearly had an influence on the company's decision.

However, smaller businesses have felt obliged to take into account the growing gulf between sterling and the pound when settling on a pricing policy.

Whistles is an English fashion chain carrying a mixture of own-label clothing and items from other design companies. The company has a small presence here - its only Irish outlet is in Dublin. Nevertheless, it has had to pass on some of the currency disparity to customers.

A MEMBER of the Dublin staff explained that while the more expensive, high fashion goods tended to carry the same prices as their equivalents in the British Whistles branches, the company's own stock does reflect some of the disparity between the two currencies.

The rate on different items varies between 10 and 20 per cent and, said the Whistles staff member, determination of prices "is basically done through the UK; the price comes up on our computer system".

Some businesses have been better prepared than others for the differences between the two currencies. Marks & Spencer, for example, began to offer distinct prices within Ireland almost three years ago. Jonathan Bradburn, the company's food and textile manager in this State, said: "Because of the punt versus the pound, it was clear when we did break the price parity that ours would reflect the local market.

"The pricing structure is based on what's right for the Irish marketplace."

So, some prices, on all childrenswear and most homeware items for instance, are the same as those on the other side of the Irish Sea. According to Mr Bradburn, where price differential is introduced, it averages between 7 and 8 per cent. "I wouldn't say there is anything really above 20 per cent, so we're absorbing a hell of a lot of it," he said.

"We have to keep our prices competitive and at a level our Irish customers want to pay."

The same is also true for Irish retailers who have in the past relied heavily on British suppliers for their stock.

CLERY'S department store is typical in this respect. A spokeswoman for the company said the store's buyers had been sourcing goods from a wider range of countries and trying to increase the amount of business done with other EU member states which had currencies linked to the euro, such as France and Italy.

An Arnotts' spokesman, Eddie Shanahan, said the company had kept "a very watchful eye" on the currency issue.

"With British manufacturing now decreasing, a lot of our sourcing comes from outside the UK anyway," he added.

Arnotts - like Clery's - has found that British suppliers are prepared "to take a considerable amount of the pain themselves". Some have agreed to negotiate price contracts in euros, while others will absorb part of the pound/sterling difference.

Therefore, explained Mr Shanahan, "we haven't put ourselves in a position where we're carrying stock heavily dependent on the sterling differential".

Furthermore, Arnotts has been just one of a number of retail businesses to make some gains while the currency fell. As Mr Shanahan observed: "For British visitors, it's like they're getting a 25 per cent discount."