The 6.2% decline in British tourism in 2017 and rise in cross-border shopping could cost the Irish economy €130 million before the end of the year. This is according to a new Drinks Industry Group of Ireland (DIGI) report which says that the continued sterling slump, combined with a hard Brexit, could cost drinks and hospitality jobs and lead to business closures.
This finding was detailed in a new report, The Economic Impact of Brexit on the Drinks and Hospitality Sectors, published by the Drinks Industry Group of Ireland (DIGI) and authored by Dublin City University economist Anthony Foley, which outlines a number of Brexit scenarios and how they could affect Ireland’s drinks industry and wider hospitality sector.
The drinks industry directly employs 92,000 people and enables 210,000 jobs in the wider hospitality sector. Through a nationwide network of pubs, hotels, restaurants, off-licences, distilleries, microbreweries, wholesalers and distributors, the drinks industry exports €1.25 billion in goods annually and generates €2.3 billion of revenue for the Exchequer.
DIGI has warned that Irish tourism is disproportionately reliant on the British market. Forty percent of all foreign visitors to Ireland originate from the UK, but a weaker pound has made this country more expensive as a holiday destination.
In the first seven months of 2017, the number of British visitors to Ireland dropped by 6.2%. If this decline continues, based on previous spending patterns (British tourists spent €1.1 billion in Ireland in 2016), DIGI estimates that Irish businesses could lose out on as much as €70 million in revenue this year alone.
Furthermore, the new report also highlights that Cross-border shopping is on the rise. In the third quarter of 2016, the latest data available, the number of Republic of Ireland-registered cars in a sample of Northern Ireland shopping centres was 56.3%, the highest since the fourth quarter of 2009. This trend is likely to continue as the sterling approaches parity with the euro. The DIGI report estimates that this could cost Irish drinks businesses €60 million this year as Republic of Ireland shoppers cross the border to buy cheaper alcohol.
Commenting on the report, Secretary of DIGI and Chief Executive of the Licensed Vintners Association (LVA), Donall O'Keefe said, "Ireland has already felt the tremors of Brexit. Our new report estimates that if trends in British tourism and cross-border shopping continue, perpetuated by a devalued sterling, Irish drinks and hospitality businesses could lose as much as €130 million this year alone."
He added, "If the UK leaves the EU without a deal and a hard Brexit occurs, this cost will be much more significant. In addition to less tourism spend and more cross-border shopping, Irish drinks exporters will be subject to tariffs, new regulations, border checks and a smaller UK market, all of which will lead to massive administrative expenditure that could easily sink some smaller SMEs in our industry."
Source: www.businessworld.ie
