Southern Economy Reeling; Exchange Rate Blamed : N. Ireland a Mecca for Bargain Hunters

Businesses here and elsewhere along the border watch in dismay as their countrymen stream into Northern Ireland on buying sprees lured by bargain prices.

Harp, a popular Irish beer, is brewed in this town of 28,000, but it sells for less than half the local price 12 miles across the border in Newry.

A 15-ounce can costs the equivalent of $1.42 in Dundalk and only 62 cents in Newry.

Beer is just one of an array of consumer goods that are 25% to 60% cheaper in Northern Ireland.

Exchange Rate Blamed

This has come about because of Ireland’s taxation and because its currency has risen in value against the British pound, which is used in Northern Ireland. It takes 20% fewer Irish pounds now to buy British pounds.

Thus Northern Ireland, a British province, is becoming a vast discount store for the southern Irish.

Tens of thousands of them swarm across the 303-mile frontier every weekend in search of bargains, leaving what Sean McEniff, a town councilman in Bundoran, in western Ireland, calls “an economic desert corridor” on the Irish side.

A Bundoran bar owner, Frank O’Gorman, said that he has to post guards at his door to frisk customers. With whiskey 40% cheaper across the border, the temptation to bring one’s own is understandable, he said. But it is costing him half of his trade.

Clever Hiding Places

He said customers even hide whiskey in hot water bottles and baby bottles.

In Dundalk, 14 gas stations have closed in 18 months, deserted by motorists who now go to Newry to tank up at $2.35 a gallon, a saving of 65 cents a gallon.

On weekends, when buses haul about 10,000 shoppers across the border from all over Ireland, Newry is packed while Dundalk slumbers. Trains disgorge hundreds more shoppers, many of them housewives known as “wheelies,” because they bring folding shopping carts.

The 66-mile round trip from Dublin to Newry costs $8.60 by bus and comes out as pure profit for the driver, since he can cover his expenses by buying cheaper gasoline in Newry. For shoppers, the fare is paltry contrasted with the savings on goods across the border.

Cigarettes and TVs

A pack of cigarettes is $2.40 in Dundalk and 56 cents cheaper in Newry.

A color TV set costing $935 in Dublin sells for half that in Newry, and for an additional $32 some dealers will sneak the set past customs and deliver it to the buyer in Dundalk.

Since Ireland and Britain belong to the European Economic Community, or Common Market, customs checks are minimal. The only delay comes at a British army checkpoint where troops search for smuggled weapons.

If customs officers happen to be extra vigilant at the 26 official border crossings, plenty of unguarded country lanes are available.

High Unemployment

The toll on southern towns like Dundalk is heavy. Unemployment is 30%, 10 percentage points above the national average.

“I used to employ 28 people,” Miceal O Domhnaill, who owns a hardware store, said. “Now it’s myself and one other. If I could, I’d sell my business and move across the border.”

The Argus, Dundalk’s newspaper, wrote recently that cross-border trade “is now threatening the very social fabric of the area.”

Border traders claim that the trend is diverting $290 million of consumer spending that would otherwise stimulate the republic’s stagnant economy. The government puts the figure at $180 million for 1985, and officials expect 1986 to be higher when the final figures are in.

Campaign Unheeded

Young Ireland, a national youth organization, has campaigned against cross-border trading. But its president, David Hammond, said that “appeals to the national conscience unfortunately have only a limited effect in the present economic climate.”