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Galway shoppers 'to come north' Southern shoppers 'to head north'
(40 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 would result in record numbers of southern 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 Christmas shopping could justify a family travelling from as far away as Dublin up to Newry.
And in the west of the island from as far away as Galway to Enniskillen. In the west, shoppers could travel from as far as Galway to Enniskillen.
The cutting of VAT to 15% for a 13-month period was announced by Chancellor Alistair Darling on Monday as part of the pre-Budget report.The cutting of VAT to 15% for a 13-month period was announced by Chancellor Alistair Darling on Monday 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 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: the PBR and you
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 with the fact we're already in 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 catalogue's prices are going to be outdated so they're going to be bringing out leaflets on which the prices will be slashed.
PRE-BUDGET REPORT class="" href="http://news.bbc.co.uk/1/shared/bsp/hi/pdfs/24_11_08_pbr_completereport.pdf">Report in full Most computers will open PDF documents automatically, but you may need to download Adobe Acrobat Reader. href="http://www.adobe.com/products/acrobat/readstep2.html">Download the reader here "That's going to have a psychological impact, with people wanting to make sure they're also benefiting from the bargains to be had.
"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. PRE-BUDGET REPORT class="" href="http://news.bbc.co.uk/1/shared/bsp/hi/pdfs/24_11_08_pbr_completereport.pdf">Report in full Most computers will open PDF documents automatically, but you may need to download Adobe Acrobat Reader. href="http://www.adobe.com/products/acrobat/readstep2.html">Download the reader here Retail Ireland spokesman Torlach Denihan warned the VAT cut would have "very serious" consequences for border towns in the Republic.
"It makes Ireland less competitive in comparison to our nearest neighbour (and) will compound the problem of people crossing the border to shop," he said.
"As a country we need to look at our VAT rate and consideration should be given to a lower rate as part of a package to stimulate the economy and reverse the decline in retail sales."
However, Taoiseach Brian Cowen said that as a smaller economy, the Republic had less "room for manoeuvre".
The Chancellor said the VAT cut would put about £12.5bn in consumers' pockets.
However, shoppers will not be able to take advantage of cheaper drink, as duty on alcohol, tobacco and petrol will permanently rise to offset the 2.5% VAT cut.However, shoppers will not be able to take advantage of cheaper drink, as duty on alcohol, tobacco and petrol will permanently rise to offset the 2.5% VAT cut.