Business, Finance & Economics

Irish bargain-hunting


DUNDALK, Ireland — When driving from the Irish Republic into Northern Ireland it’s hard to tell that you have crossed the border.

There are no customs or immigration posts. The rows of houses and green fields and heather-covered mountains look just the same.

One clue is that the road signs change from kilometers to miles. Another is the volume of cars parked outside retail stores.

If the parking lots are deserted then you are still in the Republic. If they are crowded and cars with southern registration plates are cruising around looking for a parking space, then you have definitely arrived in Northern Ireland.

The difference in prices for consumer items between the two jurisdictions on the island is so great that hundreds of thousands of southerners drive across the border every day to shop for bargains at stores in Northern Ireland border towns such as Enniskillen and Newry.

The Enniskillen branch of Asda, the United Kingdom subsidiary of Wal-Mart, has become the second busiest in the United Kingdom. The only Asda store with a larger revenue is located in Essex, in England, and is three times as big.

In the Republic, on the other hand, shops are going out of business. The big Superquinn store in Dundalk, just south of the border, is closing and the supermarket chain is laying off 400 workers.

“There is no doubt that southern shoppers make us such a busy store,” said duty manager Lorcan Boyle at the 24-hour Asda Store on Enniskillen’s Derrychara Road.

People come from as far away as Cork, over 200 miles to the south, he said. They stock up on items that cost twice as much in the Republic, such as detergents, dish-washing liquid, diapers and baby foods.

Trade in Northern Ireland — in everything from cars and gardening equipment to wines and spirits — has been sustained by southern buyers, allowing many northern stores to beat the Europe-wide recession.

Northern Ireland’s biggest car dealership, the Charles Hurst Group, estimates that almost one in three cars it sells is exported to the south. Car sales in the Republic at the end of last year were down by more than 60 percent.

The daily exodus of shoppers from the Republic is a setback for the Dublin exchequer, which is deprived of the much-needed Value Added Tax, known as VAT, which is imposed on many types of consumer goods.

Finance Minister Brian Lenihan, faced with a precipitous drop in overall revenue due to the Republic’s deepening recession, has called on Republic of Ireland’s citizens to shop at home.

“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 once chided listeners in a radio interview.

His remarks provoked widespread scorn. The appeal to patriotism — coming from a member of a party that pays lip service to the cause of Irish unity — was especially insulting to shop owners in Northern Ireland who regard themselves as Irish nationalists.

Even some of Lenihan’ parliamentary colleagues in the Republic’s dominant Fianna Fail party found the suggestion ridiculous — like Jim McDaid, who lives in County Donegal close to the border.

“I don’t accept any of this ‘patriotism’ rubbish — the north is Ireland too,” he said, adding that he had got “phenomenal bargains” in shirts in Strabane in Northern Ireland.

It also makes little sense. On a trip north I bought butter and cheese manufactured in the Republic at a store in Newry owned by a company based south of the border. It was hardly an unpatriotic act.

Meanwhile at home in Dublin last weekend I purchase British-made breakfast cereals at my local branch of Tesco, a U.K.-based chain store, with the help of a check-out assistant from Lithuania.

Ireland prides itself on being an open economy, dependent on the free flow of goods and investment. And no objections were raised a few years ago about northerners driving south to fill their tanks when gas was cheaper in the Republic.

Everyone in the south, it seems, has their own account of bargains in Northern Ireland. I am dining out on the story of the carpet I bought in Ikea outside Belfast in Northern Ireland, the only branch of the Swedish home products chain on the island.

At 200 pounds ($286), it was a third of the amount I had been quoted for a similar carpet in a Dublin store, and it was further discounted by 30 percent from the regular price.

One of the reasons for the price disparity is a 17 percent rise last year in the value of the euro, used in the Republic, against the U.K. pound, which circulates in Northern Ireland.
Another is the Irish government’s decision last autumn to increase VAT while the U.K. government lowered its VAT rates, making a tax differential of 6.5 percent.

The higher prices in the Republic have also been attributed to a “rip-off” attitude among some Irish retailers who routinely charge more than the exchange rate for products sourced in the U.K., which make up the bulk of imported consumer goods.

This is partly the reason Ireland was rated the fourth most expensive country in the world in a recent survey by U.K. price comparison website, which placed the United Kingdom seventh.

This might change now that the Republic’s retailers are suffering the perfect storm of intense competition from the North combined with rising public anger at inflated prices, not to mention deflation for the first time since 1960.

Perhaps the worst offenders, the "gombeen men" who as W.B.Yeats so aptly put it, “… fumble in a greasy till/ And add the halfpence to the pence” in the pursuit of money, will at long last be forced to reduce their profits to attract back their long-suffering customers.


More GlobalPost dispatches from Ireland:

Interview: Irish Foreign Minister Micheal Martin

Unrest brews as the government implements crisis measures to save the economy.