News and Press

Euro-sterling parity could cost Irish businesses tens of millions as shoppers cross the border for cheaper alcohol products

Posted on 09 October 2017

Recent CSO report implicates cross-border shopping in decline in state revenue take: Drinks Industry Group of Ireland says action must be taken to safeguard drinks and hospitality industry

  • Brexit-induced cross-border shopping surge and British tourism contraction alone could cost Irish economy €130 million before the end of the year, says DIGI;
  • DIGI calls on Government to reduce Ireland’s alcohol excise tax in Budget 2018.

Euro-sterling parity could cost Ireland’s drinks and hospitality businesses tens of millions in lost revenue as Irish shoppers cross the border for more affordable products, including alcohol.

The warning, issued today by the Drinks Industry Group of Ireland (DIGI), follows a recent CSO report that implicates cross-border shopping in the decline in state revenue take.

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’s latest report, The Economic Impact of Brexit on the Drinks and Hospitality Sectors, authored by DCU economist Anthony Foley, estimated that a surge in cross-border shopping could cost the economy as much as €60 million before the end of 2017. If the sterling continues to drop against the euro in 2018 and reaches parity, these losses could be significantly more.

This problem is compacted by a contraction in Ireland’s biggest tourism market, the UK. In the first seven months of the year, British tourist numbers dropped by 6.2 percent. If this downward trend continues, decreased spend could cost the drinks and hospitality industry a further €70 million by year’s end.

Commenting, Donall O’Keeffe, Secretary at DIGI and Chief Executive, Licensed Vintners Association, said: “The drinks and hospitality industry is feeling the tremors of Brexit. DIGI predicts that the cross-border shopping surge and decrease in British tourism could cost the Irish economy €130 million before the end of the year. This is before a Brexit deal is even agreed and discounts many other potential costly factors, including the loss of customers, introduction of tariffs, new trade regulations and border checks.”

Ahead of Budget 2018, DIGI is calling on the Government to enact a number of pro-enterprise measures, including reducing alcohol excise tax by 15 percent.

Mr O’Keeffe said: “By lowering the financial burden of excise tax, drinks and hospitality businesses will be able to focus on becoming more price competitive, and investing in their products and services. This will allow them to win back cross-border shoppers and entice British tourists to Ireland.

“This Government must prioritise protecting the Irish industries that are disproportionately exposed to Brexit, like drinks and hospitality.”

Ireland’s overall alcohol excise tax is the second highest in the EU. Broken down by drink type, Ireland has the highest excise tax on wine, the second highest on beer and the third highest on spirits.

 
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