Mixed fortunes as sterling-euro rate reaches new high

Euro notes. Photographer: Simon Dawson/Bloomberg via Getty Images
Euro notes. Photographer: Simon Dawson/Bloomberg via Getty Images

The strongest pound to euro exchange rate in almost a decade is resulting in Derry’s traders and cross-border workers taking a hit, while Donegal experiences a business bonanza, local businesses sectors have confirmed.

Chambers of Commerce across the region have reported mixed fortunes as more and more people take advantage of new highs of £1: €1.43 (€1: 70p) yesterday- rates not seen since before the recession back in 2007.

British Currency Coins and Notes

British Currency Coins and Notes

Traders in Inishowen and Letterkenny are reporting a marked upsurge in visitors from the north and also an increase in the number of Donegal people opting to shop at home.

This has resulted in a significant reduction in the number of cross-border shoppers coming into Derry.

While pointing out that currency fluctuations were nothing new for the border area, Sinead McLaughlin, Chief Executive of Derry’s Chamber of Commerce, told the Journal: “The current situation has seen the value of the Euro plummet and it is having an impact on the direction of travel for cross-border trade”.

“However,” she added, “businesses in Derry have always been very competitive and resilient.”

Sinead McLaughlin, Chief Executive of Derry's Chamber of Commerce.

Sinead McLaughlin, Chief Executive of Derry's Chamber of Commerce.

Ryan Stewart, President of Buncrana Chamber of Commerce said things were looking up with a number of new businesses opened along Main Street and more generally across the peninsula.

Mr Stewart said: “There has been a significant increase in sterling take in the town, but the biggest thing is local people shopping local and not travelling over the border and losing a fortune on their Euro.”

Toni Forrester, Chief Executive of Letterkenny Chamber of Commerce, meanwhile said: “We are definitely seeing an increase in shoppers who may have traditionally seen Derry as their preferred destination. With exchange rates as they are, there is little to attract people to shop in Northern Ireland.”

Ms McLaughlin said local retailers have not been slow in moving to counteract the effects of the exchange rate.

Ryan Stewart, President of Buncrana Chamber of Commerce.

Ryan Stewart, President of Buncrana Chamber of Commerce.

Shops had been introducing “significant discounting”, she said, while the hospitality sector was offering great deals “which is effectually neutralising the impact of the weak Euro against the pound”.

Ms McLaughlin added: “Businesses prefer to operate in a stable operating environment, and I know our members within the hospitality sector are very keen to see VAT rates equalised on both sides of the border, to create fair competition and greater stability against constant currency fluctuations.”

Ms McLaughlin voiced concern for people who live in Derry but work in the south and receive wages in euros.

“These workers are experiencing a significant cut in salary. That is often overlooked in these conversations and has a real impact on employees’ disposable income,” she said.

Toni Forrester, CEO Letterkennhy Chamber.  Photo Clive Wasson

Toni Forrester, CEO Letterkennhy Chamber. Photo Clive Wasson

Ms Forrester agreed this was a very negative side effect of the present exchange rate.

“If you work in Letterkenny but live in Derry, things will be tight and some may have chosen to seek jobs elsewhere but there are always swings and roundabouts,” she said.

In terms of trade in Donegal’s main town, she added: “This year has been very strong for the hospitality sector and their summer trade has been very good. This obviously has a knock on effect on retail, restaurants, cafes, family attractions.

“The exchange rate plays a big part, not just in bringing in the Northern and UK customers but more importantly encouraging local people to shop in the county.”

Mr Stewart concurred that the increase in trade was “pretty much across the board”.

“In terms of being competitive, it is only in the past six months that sterling rate has gone up so significantly. Up until that point businesses here were still competitive - everyone had to adjust because of the recession,” he said, adding that he did not foresee any significant change in the near future.