British budget bad news for Irish shops and airports

IRISH airports and retailers south of the border could be the losers in the British budget today, with exporters left smiling.

However, with British Chancellor of the Exchequer George Osborne facing a multitude of problems at home it is unlikely that anything he delivers will seriously impact on Ireland and Irish consumers, according to chief economist at PricewaterhouseCoopers (PWC) in Belfast, Esmond Birnie.

He said Mr Osborne has promised his budget will be “unashamedly pro-growth, pro-enterprise and pro-aspiration”. Irish exporters looking for a recovery in traditional British export markets will welcome the plans.

Mr Birnie said: “After all, in the first 11 months of 2010, Irish exports to the UK totalled €12.8 billion, of which €1.2bn went to Northern Ireland — and this was 15% of all Irish exports.”

Mr Bernie said a plan to scrap fuel duty increase will ease the pain a little for beleaguered British motorists but fuel retailers in the Republic can still expect “one-way traffic heading their way from north of the border”.

“And a heavily-leaked plan to freeze air passenger duty from UK airports will still leave Dublin a competitive taking-off airport for British long-haul travellers and this could impact on the competition for travellers between Belfast International and Dublin Airports,” he said.

Experts also believe that, with the recent increase in the VAT rate to 20% in Britain, it is unlikely that there will be any significant announcements here.

There is speculation that the chancellor will not be increasing Air Passenger Duty in the budget, which will provide some relief for consumers.

Goodbody analyst Eamonn Hughes said the duty goes up with the rate of inflation each year but the chancellor looks set to announce that there will be no rise this year.

“Presently, the duty adds £12 to the cost of economy flights within Europe, £60 to the US and as much as £85 on flights further afield, like Australia. The move will be seen as helpful for airlines at the margin, though whatever the chancellor gives, it is always possible that the airlines ultimately take away given the rising oil price,” he said.

Britain accounts for almost 25% of traffic for Ryanair and just under 50% for EasyJet.

Despite a potential £8bn in tax revenue, Mr Osborne is not expected to be in a generous mood during his second budget.