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It may happen. It may not. October 31, 2016

Posted by WorldbyStorm in Uncategorized.

I’m not sure what to make of the headline on the SBP this weekend which trumpeted:

Tax take to plummet as 1 in 3 shoppers break for the border.

If that sounds worrying, well so it should. The article continued:

The state is facing a haemorrhage of tax revenues with new figures revealing that one third of all shoppers the Republic plan to cross the borer to the North for their Christmas shopping to take advantage of the slump in sterling. The situation is amplified in border counties with … 56 per cent of people living in those counties will travel north.


The scale of the shopping exodus revealed in a Red C poll for the SBP is a massive blow to the exchequer which will lose hundreds of million of euro in VAT and excise.

Isn’t this a little premature? What do people think?


1. CMK - October 31, 2016

I think the SBP are taking the whole ‘humans as calculating rational utility maximisers’ thing a bit too seriously (lads, it’s only make-believe, like Santa or the Easter Bunny). Yes, there will be an increase in cross border shopping but probably not on the scale the SBP think. If you can cross the border in a twenty-thirty minute round trip then, OK, it probably is worthwhile shopping there. If it involves longer trips then probably less so. Despite living a living a 30 minute drive from Newry and a 45 minute drive from Banbridge I have only ever gone shopping there once and it was a nightmare as Newry was clogged up with southern registered cars. Made a bit of a saving but not enough to justify the hassle. Like many in their class, the SBP leader writers probably can’t quite grasp the fact that a lot of people on low incomes, who could benefit from lower prices over the border, often are dependent on public transport etc and making the trip would be a huge hassle. While there may be an SBP reader who would conceivably make a day trip from Dingle to Newry to save 20 euro on their weekly shop, I think in the general run of things the impact will be less than the poor dears feverishly imagine.


WorldbyStorm - October 31, 2016

I couldn’t put my thoughts better CMK. I just don’t buy the underlying thesis and glad I’m not the only one!


CMK - October 31, 2016

‘1 in 3 shoppers’ means well over a million surely, that’s a stretch even for the gullible lads in the SBP editorial office!


2. EWI - October 31, 2016

Isn’t this a little premature?

Hell, no. Anyone ever note the profiteering in the ROI by firms such as Easons and Tesco? You’d be mad to buy down here, particularly as they appear to be reducing their payroll and corporate tax every year.


WorldbyStorm - October 31, 2016

That I agree with re profiteering but hordes of people crossing the border?


EWI - October 31, 2016

Maybe on certain Saturdays and Sundays in the next couple of months, there’ll be a lot more people crossing (and I have another pressing reason to go up there for a day). But not exactly ‘hordes’, no.


WorldbyStorm - October 31, 2016

Yeah, that’s true. I think there’ll be an uptick, more than a flood. And in a way that’s my gripe with the SBP – we just don’t know yet.


3. Joe - October 31, 2016

I’ve been up north shopping a fair few times down the years. Thing is and I think this applies to a lot of people, it’s as much about the day trip as it is about the shopping. Isn’t it groups of people (usually women) having an away day, the crack on the bus or the train on the way up, a few drinks during the day, the crack of ‘bargains’ and buying stuff you can’t get down here in shops that we don’t have down here. Back in the day, it was ‘smuggling’ and trying to hide stuff from the customs.
I remember in the early seventies there was a frenzy about shopping at the market in Jonesborough and other places over the border. Tellies were to be had for a tenner, the story went. And a friend of someone’s cousin bought one and it didn’t work and they opened it up and it was stuffed with Rolex watches worth a hundred quid each. You see it was the travellers, they were smuggling tellies and watches and all kinds of stuff.
Then there’s the stories of the day trip to Holyhead on the boat and the massive sessions on the boat and how shit a place Holyhead is.

So cross border shopping ain’t all bad – it’s a day out, stories and crack. And bargains.


CMK - October 31, 2016

My Da tells me that from the early seventies onwards newly married couples would give a ‘man with a van’ a few bob and, voila, their fridge, TV, cooker etc would arrive a week later. There were a few ‘specialists’ where we lived. If you worked on the Dublin-Belfast rail line and got to know the drivers you could get some bargains. More than one telly made its way south in the cab of an NIR locomotive or guards van.


WorldbyStorm - October 31, 2016

That’s interesting Joe, sounds very possible indeed re the day trip aspect. It’s like Belfast, I want to get to the Titanic exhibition but haven’t had the time to do so.


An Cathaoirleach - October 31, 2016

Excise duties in August & September are already showing a substantial difference from profile (expected yield). Looking at September, Excise duty was 16.3% down on profile and 10.7% down on the same month in 2015. In August, Excise was 19.6% behind profile and 14.3% behind August 2015. This is despite a very strong tourist trade.

DofF economic figures were prepared using currency figure of 85p, which was the OECD estimate at the start of October. however assumed range is now in the range 95p to parity for 2017.

Substantial losses are likely across a range of items liable to excise duties. Previous recent weaknesses in £stg would suggest the likely loss of at least €1,500M in excise duties and VAT.


WorldbyStorm - November 1, 2016

Fair points AC. How bad do you think it may get?


Joe - November 1, 2016

Or how good? Isn’t it all down to geographical location?


4. irishelectionliterature - November 1, 2016

Just waiting for some news piece about all the striking teachers going North to do their Christmas shopping….

Liked by 1 person

An Cathaoirleach - November 1, 2016

WbS – Francois Hollande’s former advisor in a piece of research for her new employers suggested that £stg will fall to as low as €1.15 before settling down. Unlike recent fluctuations, this is caused by a major change in political & economic direction. It is no longer that the decline is in question, rather the level at which it will settle.

Róisín Shortall put some scenarios to Michael Noonan, which were answered in Dáil question 31257/16 on 20th October. The scenarios assumed differing levels of declines in sales of excise able goods.

If one accepts an average rate for 2017 of close to parity, the likely loss of jobs here in retail alone would be massive, perhaps up to 20,000. Many specialist retailers depend on the 3 months running into Christmas for up to two thirds of their annual turnover. Prices increasing in UKNI in 2017, when shops restock will be too late. As your outgoings are generally fixed, a loss of even 10% of sales disproportionately hits the bottom line and turns a viable business into a lossmaker.

Sales of new cars will fall massively as high spec 2nd hand vehicles become much cheaper. This also devalues trade ins making the purchase of a new car even more expensive. Imports of used cars increased 64% in September. I priced a 2012 Audi A4 2.0 diesel and prices after paying reduced VRT were around €7,000 cheaper in UKNI. New car sales are a tax rich source of Revenue as you have VRT & then VAT on top of the revised price.

Within specific areas of the economy, there is going to be slaughter. It is estimated that around 50% of the 3,500 jobs in the mushroom industry are gone or will be gone in the very near future. Margins are too tight to afford the extra cost of hedging currency fluctuations, i.e. insuring against currency losses. Because these industries are generally in rural areas, where alternatives are few and far between, the losses will be severe.

Many other parts of the food industry will be hit too. Major retailers will demand that at least some of the currency losses be absorbed by suppliers.

There will be a very serious hit to employment to those who have the least chances of getting new work, general operatives & semi-skilled workers.

While I think there will be movement of some jobs to Dublin, the loss of indigenous employment dependent of exporting to the UK,will be far greater. Ireland is likely to be the greatest loser from the UK’s departure, far greater than the UK itself.


Joe - November 1, 2016

Irish Daily Mail headline has 40% in RoI supporting irexit or ‘going with UK’ or somesuch wording, 60% saying ‘stay as we are’.
I can’t think of any serious political formation that’s currently advocating an irexit. Maybe figures like those might tempt some?


Gewerkschaftler - November 1, 2016

Come on Joe – that’s the Daily Mail were talking about.

I wouldn’t touch figures from such a source because I’m fairly certain which orifice they pulled them.


Joe - November 1, 2016

I know, I know.
But purely on Irish capitalist economy terms, there must be sums to be done on whether the RoI economy would be better off hanging with the UK or the EU. Just saying.


Gewerkschaftler - November 2, 2016

I hope someone is crunching numbers like that, Joe.

The problem is that the consequences and mechanisms of Brexit, as well as the post-Brexit arrangements are surrounded by a cloud of unknowing.

Partly promoted by Brexit hucksters who want to pretend they are holding a full house rather than a pair of fives in the negotiations which they clearly imagine as a zero sum poker game. In reality it will be a negative sum game where the EU position will be directed towards damage and infection limitation.

Any business or organisation is not going to make much investment in an area as uncertain as Little Britain during the Brexit years (/decades?). The EU is deeply crap on a number of levels, but at least it offers a certain stability.

Add to that, in the case of Irexit, the RoI would be in a similar position to Little Britain – having to renegotiate (or simply drop out of) numerous treaties and replace decades of EU based laws. I doubt that we have the capacity in the civil service for that.

So Irexit doesn’t seem that attractive in the short term – i.e. the Brexit event horizon. In the medium to long term without renewal from below the EU will quite possibly crack apart. At that point RoI would need to consider with which splinter it wishes to associate.


Gewerkschaftler - November 1, 2016

It’s early days but the point about narrow-margin businesses not being able to cope with currency fluctuations is a good one. And one that promoters of the benefits of ‘controlling’ your own currency choose to ignore.

Purely anecdotally more people seem to be going north to shop from the RoI border counties. And I’d say there will be significant damage to workers who depend on businesses that export to Britain for their wages. Especially in rural Ireland.

I doubt there will be more damage to workers in RoI than those in Britain. But again, it’s early days yet.


An Cathaoirleach - November 2, 2016

@G The damage will be within specific industries, mainly indigenous owned. MNCs for example will normally write contracts in their operational currency, Euro or US$ normally. A small indigenous Irish business supplying into a large UK firm have no option but to accept the currency risk by accepting a £stg contract.

MNCs also have greater economic power as was seen in the last week with Microsoft increasing their prices by up to 25% to UK customers, who are incidentally served from Ireland. Unlike many of its cloud competitors, such as Amazon, it wrote contracts in the UK in £stg.

Border counties will suffer the main loss in day to day shopping. The problem is larger purchases around Xmas & cars, the tax hit is particularly large to the Irish Exchequer.
New car sales in October fell mirroring the increase in used imports in September.

UK inflation and more particularly import costs will, over a period, balance out, but the time this will take is likely to be too long for many businesses to survive. You may also get a temporary problem of dumping into Irish markets from the UK, taking advantage of the £stg weakness.

It is going to be very bumpy for some years.


Gewerkschaftler - November 2, 2016

The case of Microsoft is a precursor of the import price inflation the UK is likely to face.

I’ve heard purely anecdotally that Enniskillen is packed these days. That must have some effect on retail in border towns in the RoI.

Agree that this is going to take years to reach any kind of stability.


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