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Galway shoppers 'to come north' Galway shoppers 'to come north'
(20 minutes later)
The cutting of VAT from 17.5% to 15% will have a "massive impact" on the level of cross-border shopping, a leading economist has said.The cutting of VAT from 17.5% to 15% will have a "massive impact" on the level of cross-border shopping, a leading economist has said.
Professor Mike Smyth said it will result in record number of shoppers travelling north.Professor Mike Smyth said it will result in record number of shoppers travelling north.
Professor Smith said the savings to be made on a Christmas large shop could justify a family travelling from as south as Dublin to Newry.Professor Smith said the savings to be made on a Christmas large shop could justify a family travelling from as south as Dublin to Newry.
And in the east of the island from as far away as Galway to Enniskillen.And in the east of the island from as far away as Galway to Enniskillen.
The cutting of VAT to 15% was announced by Alistair Darling on Thursday as part of the pre-Budget report.The cutting of VAT to 15% was announced by Alistair Darling on Thursday as part of the pre-Budget report.
KEY POINTS VAT cut by 2.5 percentage points45% tax rate on earnings over £150,000 from 2011All National Insurance to go up by 0.5% from 2010Economy to shrink by up to 1.25% next yearBorrowing to hit record £118bnPhased increase in vehicle excise duty At-a-glance: Pre-Budget reportQ&A: pre-Budget report
It will leave the rate in Northern Ireland more than 6% lower than in the Republic.It will leave the rate in Northern Ireland more than 6% lower than in the Republic.
"The reduction in VAT along the fact we're in already discount mode is going to have a huge effect on cross-border shopping," said Professor Smyth of the University of Ulster's School of Economics."The reduction in VAT along the fact we're in already discount mode is going to have a huge effect on cross-border shopping," said Professor Smyth of the University of Ulster's School of Economics.
"If you consider somewhere like Argos - all their catalogues prices are going to be out-date so they're going to be bringing out leaflets on which the prices will be slashed and that's going to have a psychological impact with people wanting to make sure they're also benefitting from the bargains to be had."If you consider somewhere like Argos - all their catalogues prices are going to be out-date so they're going to be bringing out leaflets on which the prices will be slashed and that's going to have a psychological impact with people wanting to make sure they're also benefitting from the bargains to be had.
PRE-BUDGET REPORT Report in full Most computers will open PDF documents automatically, but you may need to download Adobe Acrobat Reader. Download the reader here
"And if people find the traffic is too busy around somewhere like Newry, they'll travel on to Lisburn, Belfast, wherever."And if people find the traffic is too busy around somewhere like Newry, they'll travel on to Lisburn, Belfast, wherever.
"It's going to impact across the board, and white goods, such as washing machines, were already much cheaper up here anyway.""It's going to impact across the board, and white goods, such as washing machines, were already much cheaper up here anyway."
The Chancellor said VAT would be cut from 17.5% to 15% for 13 months from Monday, putting about £12.5bn in consumers' pockets.The Chancellor said VAT would be cut from 17.5% to 15% for 13 months from Monday, putting about £12.5bn in consumers' pockets.