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Outline one possible economic effect which an increase in the number of people travelling from the Republic of Ireland to shop in Northern Ireland may have on each of the following: Retailers in the Republic of Ireland: Irish Government’s finances: - Leaving Cert Economics - Question 3 - 2017
Question 3
Outline one possible economic effect which an increase in the number of people travelling from the Republic of Ireland to shop in Northern Ireland may have on each o... show full transcript
Worked Solution & Example Answer:Outline one possible economic effect which an increase in the number of people travelling from the Republic of Ireland to shop in Northern Ireland may have on each of the following: Retailers in the Republic of Ireland: Irish Government’s finances: - Leaving Cert Economics - Question 3 - 2017
Step 1
Retailers in the Republic of Ireland:
Answer
An increase in the number of people travelling from the Republic of Ireland to shop in Northern Ireland could lead to reduced sales and profits for retailers in the Republic. This is because shoppers may prefer to make purchases in Northern Ireland, where prices may be lower. Consequently, the decline in consumer spending for Irish retailers can result in some businesses facing financial difficulties, potentially leading to store closures and job losses.
Step 2
Irish Government’s finances:
Answer
The Irish Government's finances may be negatively impacted as this increase in shopping in Northern Ireland could reduce VAT receipts from the sale of goods and services. Additionally, a decrease in local spending could lead to a reduction in revenue from corporate taxes (CPT) as businesses may experience lower profits. The government may also have to adjust tax policies to address these financial shortfalls, potentially increasing taxes or cutting spending in other areas to compensate for lost revenues.