Budget 2019 a mixed bag for retailers

Tuesday, 9 October 2018
Retail Ireland, the Ibec group that represents the retail sector, has said that while investment in in-work training programmes and further easing of the consumer tax burden is to be welcomed, Budget 2019 will do little to protect the competitive position of the Irish retail sector.

Director of Retail Ireland, Thomas Burke said: “The Irish retail sector has come under increasing pressure from rapidly rising input costs in areas such as rent, insurance and labour over recent months. This cost base challenge is likely to be exacerbated by Brexit and other geopolitical events over the coming months as supply chain complexity and costs increase.

“Today’s Budget presented Government with a unique opportunity to protect a sector which employs over 295,000 people in every city, town and village across Ireland from these headwinds. Unfortunately, this opportunity has largely been missed.

“The decision to increase the National Minimum Wage (NMW) to €9.80 in 2019, a cumulative increase of over 13% since 2015, is most disappointing. This increase significantly outstrips the growth in the cost of living which stands at roughly 1% per annum. Today’s announcement is further evidence of the role the State continues to play in driving business costs upwards and will only serve to further increase wage pressures for retailers at levels well above the National Minimum Wage rate.

“Ahead of the launch of the Retail Ireland Apprenticeship in Retail Supervision in 2019, we fully support the further provision of funding for new and existing apprenticeship programmes and additional investment for Skillnet Ireland. However, retailers had hoped that the Government would have addressed the need for ring-fenced funding and greater support for the development of modern emerging apprenticeships.

“The income tax package, announced today, will reduce the burden on average income earners and put some money in the pockets of Irish consumers. It will also help retailers to attract and retain talent within their businesses. Unfortunately, it is not all good news for consumers who will be hit by VAT hikes on certain goods from January 2019. Categories such as food services and hairdressing will see their VAT rates increased following the Government’s decision to raise the 9% VAT rate band to 13.5%. These categories are struggling under the weight of an increasing cost base and a State imposed increase in consumer prices at this time is most unwelcome.

“This is a critical period for the retail industry, caused by a perfect storm of pressures including rising costs, e-commerce changing consumer’s shopping patterns and Brexit. It is disappointing that Budget 2019 hasn’t done more to protect the geographically and socially vital Irish retail sector, as we enter into what will be a very difficult trading period.”