Weaker sterling on back of no-deal Brexit unlikely to benefit NI

Northern Ireland is unlikely to benefit in the long run from an influx of shoppers from the Republic if the pound weakens further after Brexit, the North’s Department of Economy has warned.

In recent months retailers in Northern Ireland have reported a strong increase in the number of people from the South who have taken advantage of the euro’s strength against sterling to buy items from groceries to luxury products.

A report by the Department for the Economy on the potential “impacts of sterling depreciation under a no-deal scenario” states that although weaker sterling should encourage people from the South to travel North this might not happen after Brexit.

“This is only likely to happen if prices in NI are not adversely affected which, given the impact of depreciation on the cost of imports and inflation, is unlikely to be the case. Therefore, any benefit of a weaker sterling for Irish cross-Border shoppers would be short lived as the cost of goods and services increase in the medium to long term. The uncertainty around customs and VAT requirements may also have an impact on the number of cross-Border shoppers in NI,” notes the report.

According to the department any further decline in sterling is also unlikely to help exporters in the North.

Although the report acknowledges that “weaker sterling has traditionally been seen as good for exporters and bad for importers” it warns that this fails to take take account of the “full intricacies of all-island trade”.



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