The politics of Frankfurt and London are not conducive to the smooth running of business in Ireland at this time of the year.
With a few choice words or the flick of a pen, politicians and central bankers can determine the Christmas shopping habits of tens of thousands of Irish people, and cause heart palpitations in the Department of Finance.
This festive season will see the biggest ‘break for the border’ since 2008 — the British cabinet’s strident Brexiteers have made sure of that.
The pound has fared so badly since Theresa May’s hardline address to the Tory party conference, last month, that for many consumers the idea of hitting the M1 northbound is now a ‘no-brainer’.
InterTrade Ireland has a treasure trove of statistics on its website, about all things cross-border. It monitors cross-border shopping by counting number plates. That’s simple and effective.
Lads and lassies, decked out in fleece jackets and thermals, wander around shopping centres. They are equipped with clipboards and biros, looking out for Louth, Dublin, Donegal, Cavan, and Monaghan plates.
The odd Cork and Galway one, too. They started doing this eight years ago, during the last big depreciation of the pound, in late 2008. Their data tells a simple story. When the pound suffers, Northern border towns are swamped.
As the British economy began to tank, in the days after the Lehman Brothers collapse, the governor of the Bank of England, Mervyn King, slashed interest rates.
In the mouth of Christmas, he cut rates by 1.5%. The pound responded accordingly, slumping against the euro.
The cars of southern shoppers then poured into the car parks of Newry and Enniskillen. So many, in fact, that by December they outnumbered northern registered motors by two to one. To be precise, 65.5% were from the Republic.
Pleas that southerners be ‘patriotic’ and buy their booze and mince pies ‘at home’ had gone unheeded. The euro held its value — and Irish shoppers took note.
The annual expedition to Sainsburys and Asda has occurred, to a certain extent, every Christmas since, but has never surpassed that big rush.
By 2014, with ECB president, Mario Draghi, readying his money-printing bazooka, the numbers heading north had fallen significantly. Christmas 2016 might just give 2008 a run for its money.
The narrative is well-established — it’s bad news for retailers in the border region. Jobs are threatened, while the exchequer is deprived of VAT and excise.
The fact that a weakened pound equates to great savings for hard-pressed consumers won’t be emphasised, but they don’t need to be told that.
Putting aside the politics of the border, this shopping saga highlights the impracticalities that come with having two divergent currencies on one small island — both of which are beyond our control.
In 2008, the falling pound exacerbated the Irish slide into recession and eventual national bankruptcy. The last thing the economy needed was a hard euro.
Instead, we sat around waiting for a few years, until it suited Europe to pursue an aggressive growth strategy. The ECB even put up interest rates briefly, in 2011.
We may find ourselves in a better position, at present — but there are parallels with 2008.
Now, we are again lumped with a hardening euro. Jobs have already been lost here, as a result — expect more to go in the new year.
Those ‘unpatriotic’ cross-border shoppers are simply a reminder of how little control the State exerts over the economic forces at play here.
Paul Colgan is economics editor with ‘Ireland Live News’, on UTV Ireland.
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