Monday 22 January 2018

New northbound shopping throng carries warnings of Brexit fallout

Finance Minister Michael Noonan Photo: Tom Burke
Finance Minister Michael Noonan Photo: Tom Burke
John Downing

John Downing

The week that's fading from us started with Budget speculation - and ended with thousands planning trips to the 'Occupied Territories' to score some Lyons Tea, Hellman's and, depending on your disposition, maybe even Marmite.

Brexit is bringing us some pretty surreal early results. The price spiral of everyday products sourced in the United Kingdom may be a foretaste of some pretty large economic shocks to come - just when it appeared things were about to get better for us after a lost decade of recession.

We are probably also looking at the return of the stampede across the Border to bag 'bargains'. Yes, this periodic phenomenon is as old as the border itself. But this time it is also asking us real questions about just how prepared we are to deal with the fallout from our nearest neighbour getting ready to leave the EU by early summer 2019.

The last time we were here was autumn 2008 - and we were at the start of a prolonged economic shock. A slump in Sterling against the euro prompted hordes of shoppers in this jurisdiction to head across the Border for their pre-Christmas shopping. With traffic queues on the roads north, the late and much-liked Finance Minister Brian Lenihan publicly rebuked the cross-border bargain-hunters in a blunt appeal for patriotic shopping. "When you shop in Northern Ireland, you're paying Her Majesty's taxes, you're not paying taxes to the State that you live in," he said.

It proved to be about as useful as formulaic calls in Sinn Féin's 'An Phoblacht' for the issue to be resolved in "an all-Ireland context".

In places like Newry and Enniskillen they just piled the merchandise high, took in euros, often on a one-for-one basis against Sterling prices, and even gave change in euros.

At the Asda store in Enniskillen, for example, six out of 10 shoppers came from the Republic, much to the dismay of crowded-out locals. The store in a town that for decades was an economic blackspot was suddenly the sixth-busiest in the gigantic Walmart chain.

The Finance Minister's stinging rebuke recalled this writer's many patriotic shortcomings. In the 1970s, after a stomach-churning journey to Jonesborough Market in a clapped-out bus, I discovered that not only was Wrigley's spearmint gum cheaper, but that it also came in a seven-stick pack rather than the five-sticks which sold for more in the Republic.

Like many before and since, I coped with the guilt for my venal treachery. Personal economics has a habit of trumping national politics. Many of us will look askance at 23pc VAT in this jurisdiction - surely a worse injustice on all of us compared with the water charges or even the local property charge.

But let's try to stay with the bigger picture here. If you're trying to keep the door open and the light lighting in a shop in Dundalk or Ballyshannon, you might suddenly take a different view of the prospect of a dreaded "hard border" re-emerging as a result of Brexit.

It just might impede those North-bound bargain hunters and give you half a chance of staying in business. The politics of shopping become even more complex when they enmesh with Brexit.

But we have to also see the bigger economic picture in terms of the terrible impact on trade and movement of people that a back-to-the-future of border customs and identity checks would bring.

In Tuesday's Budget, Finance Minister Michael Noonan promised to "Brexit-proof" the economy. But the fallout in the shops in the few days since then gives some credibility to doubts expressed about this pledge by business groups and Fianna Fáil.

The Government was accused of doing too little to help Irish businesses' competitiveness on world markets and to assist firms hit by the dramatic collapse in Sterling values. It may have been predictable that Fianna Fáil dubbed the measures "pathetic" in efforts to put some distinction between themselves and Fine Gael.

But the Irish Exporters Association branded the measures "disappointing" and a "missed opportunity."

Government ministers fought back, saying extra cash was provided for the Departments of the Taoiseach, Jobs, Agriculture, Revenue and State agencies to tackle the Brexit fallout. About €1m was set aside for tourism and the special 9pc hospitality sector VAT stayed.

But the Foreign Affairs Department, which will take the main strain dealing with Brexit, only received extra funding to improve passport services.

Foreign Affairs Minister Charlie Flanagan has been active since the June 23 vote and has met all his 27 EU counterparts and many of the key players in the British government several times.

There have been promises of more resources for Ireland's EU embassy in Brussels and other key diplomatic missions and it is likely that more funding will follow. Officials have stressed Agriculture Department measures to boost farming, which may be badly hit by falling food exports. There is a 12pc increase in Enterprise Ireland funding to increase efforts in priority export markets.

Government officials quietly counsel against any rush to compensate for Sterling's decline until things firm out. But those border shopping queues carry a clear warning of tough times.

Irish Independent

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