Sterling has fallen 8.8% against the euro in the 12 months to Nov 27, 2009. When a currency rate brings benefits, companies seldom identify it as a windfall but it is just viewed as part of the success of the management! Select different periods to chart. Source: ECB

Retail Ireland director, Torlach Denihan, said:"Every 150 cross border-shopping trips during November caused the loss of one job here."

RI has based its estimates on a survey carried out by the TNS Worldpanel which analyses the UK grocery sector.

TNS estimates that 3.5% of the Republic’s retail market has migrated North.

A report prepared by the Office of the Revenue Commissioners and the Central Statistics Office, which was published in February 2009, concluded that the major causes of price differentials are costs, profit margins and the rapid depreciation of sterling against the euro. Changes in VAT rates have widened the price differentials but they remain small compared to the change in the exchange rate.

The report estimated the value of cross-border shopping in 2009 would be €450 million to €700 million.

Apart from the fall of sterling against the euro, the main VAT rate in the Republic of Ireland was increased to 21.5% in late 2008 while the UK cut its VAT rate to 15% until 31st December 2009, and from 1 January 2010 it will revert to 17.5%.

Ireland is not in favour of EU tax harmonisation and gains a significant advantage from a low corporate tax rate of 12.5%.

The search for arbitrage is not a one-way street and when EU companies shift their headquarters to Dublin, it's generally viewed as a coup officially and by professional services firms.

"Cross-border shopping during November will cause in the order of 1700 people to lose their jobs. The impact of cross border shopping over the weekend alone will cause approximately 400 job losses. If cross border
shopping continues at this rate during December similar numbers of jobs will be lost with particular devastation in border counties - - Cavan, Donegal, Louth and Monaghan.

"The people that will lose their jobs because of cross border shopping during November earn €63m," Denihan said.

He added that the total cost to the State in income tax lost and social welfare payments for the November job losses will be €34m. He has called for a cut in excise levels on alcohol by 20% because alcohol is the single biggest motivation for cross-border shopping trips.

The VAT rate should also be reduced to 18%.

Denihan also recommended the following Budget measures:

- make retail jobs eligible for the Employment Subsidy Scheme
- ban upward only rent reviews
- abolish the Retail Joint Labour Committees
- work with Local Authorities so that they can reduce commercial rates substantially when they set the 2010 rates during December.