Cross-Border shoppers' €418m spend props up North's economy

Growth either side of the Border is showing signs of increased divergence - with job numbers and wages rising in the Republic, contrasting with stagnation in Northern Ireland, according to EY Ireland.

Chief economist Neil Gibson forecasts economic growth of 4.9pc for the Republic this year, compared to a pace of expansion of 1.4pc for Northern Ireland.

The fact that the Republic is largely able to shrug off €418m of retail spend lost as a result of cross-Border shoppers capitalising on the weakness of sterling is a sign of the strength in the economy on this side of the Border, Mr Gibson said.

Away from Border counties, even the retail sector is largely unaffected by the trend, he said.

"A healthy labour market and low inflation are boosting the economy in the Republic, leaving the country in a position of strength to face the economic and geopolitical uncertainty that lies ahead. While the strength of the euro has a positive impact on exports, a more challenging environment pervades in Northern Ireland, which is not helped by the absence of a local government," he said.

According to EY's Economic Eye, the retail sector in the Republic has recovered to 2010 levels. The industry accounts for approximately one in 10 jobs here, with 10,500 additional jobs in the sector expected to be added between 2017 and 2022.

In contrast, the retail sector in Northern Ireland is expected to see the loss of 3,000 jobs over the period, even with the benefits of cross-Border trade.

"Retail's importance to the wider economy tends to be overlooked by policy makers, but in terms of job numbers it is enormous," Mr Gibson said.

He warned that a major shift to online sales and automation within stores will radically change the sector in the medium term. That will include fewer people at work in the sector and fewer local shops, but also a greater share of Irish consumer spending leaving the country as overseas online retailers increase in dominance.

Everything from employment policy to consumption taxes will potentially have to be re-examined, he said. Politicians and policy makers will need to get to grips with those changes before it's too late.

"By the time the local shops are gone, it will be too late to bring them back," he said.

In the North, a relatively higher dependence on consumer and government spending makes the current impasse at Stormont, where the DUP and Sinn Féin are refusing to form a devolved administration that can allocate spending, especially damaging, EY said.