Cross-border shopping to be hit by VAT rise
THE British government's decision to hike its VAT rate up to 20pc will be "the nail in the coffin of cross-border shopping", retailers said last night.
The Government and businesses here were jubilant at the decision by the new Conservative Chancellor George Osborne to increase VAT from 17.5pc to 20pc next year.
This brings the UK rate almost level with the 21pc charged in the Republic, narrowing the gap between Irish and British VAT rates from 6.5pc at its widest last year to just 1pc. This is expected to stem the flow of shoppers to the North.
Torlach Denihan, IBEC's Retail Ireland director, said the move would further narrow the price gap between Northern Ireland and the Republic.
"This is a further nail in the coffin for cross-border shopping," he said, adding that it would help preserve the 267,000 jobs in retailing in Ireland.
However, he said retailers here would have to keep cutting prices, which could only happen if their running costs came down, particularly rents, local authority rates and wages.