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Debt-stricken Ireland tightens belt for Christmas

With rising unemployment and drastic budget cuts imposed by the Irish government, people have cut back on luxuries like shopping sprees and dining out. The effect is a slump in retail sales and restaurant closures.

bunch of euros tightened by belt

Irish shoppers are looking for holiday deals

The party is over for many in Ireland, and this Christmas retailers and restaurateurs have been bearing the brunt of cutbacks. Irish people are spending less and staying in more, with a recent survey finding that almost 80 percent of firms did not pay for or effectively canceled the staff Christmas party this year.

Ireland's holiday frugality has hit the restaurant sector badly, which is already struggling in the recession. The Restaurant Association of Ireland says it's been a very tight Christmas and 2011 is looking bleak.

"Business has dropped by about 40 percent for the first two weeks of December and we don't see any uptake at the moment," said Adrian Cummins, CEO of the Restaurant Association. "People are tightening their belts and they're not spending on luxury items and goods and unfortunately the restaurant industry is part of that sector that has been hit by cutbacks."

One restaurant per day

Statistics show one restaurant per day is closing in Ireland, 80 percent of restaurants are running at a loss, and about 21,000 thousand jobs are at risk.

Coins and a hand-written restaurant bill

Diners in restaurants keep an eye on the price

Cummins says Christmas is a critical time of year for restaurants - making up almost a quarter of their annual income.

But he says people are choosing to stay at home and if they do go out, they're dining in cheaper eateries.

"People may be not going for the high-end Christmas lunch and people are looking at how much they spend when they actually go out for their Christmas parties," said Cummins. "Ireland [is] a sociable nation. We like to go out and eat out and drink as well but [spending in restaurants] is considerably down."

Deals not decadence

For retailers the story isn't much better. Sales have slumped an average of 20 percent. Shoppers on the streets of Dublin city centre say they've been cutting back on food and presents or shopping online.

"We'd go a bit further for the grandchildren," says one woman in Dublin, "We're not doing that this year. We're more or less looking for sale stuff because we don't what ahead of us basically'"

An Irish euro coin on a map of Ireland

Some people are taking their euros north

There's been a rise in cross-border shopping with more people heading to Northern Ireland to take advantage of cheaper prices there, as well. The latest study by AA Ireland says 1 in 20 motorists will head North over the festive season.

Torlach Denihan, the Director of Retail Ireland, says stores in the Republic of Ireland are working to battle the cross-border competition.

"Currently cross-border shopping is not a significant issue," he said. "It was an enormous issue for the retail sector 12 or 18 months ago, but at the moment it doesn't really figure. The reason for that is retailers have cut their prices in Ireland and they're in a better place to compete with the counterparts in the North."

Keeping business, keeping jobs

A survey by Ebay has found over 50 percent of Irish consumers will shop online over the Christmas and New Year period as families try and make their euros stretch further. This is already impacting shops which are trying to survive.

A 'to let' sign

Many business have been forced to close up shop

Denihan estimates that 47,000 people have so far lost their jobs in the retail sector since the recession hit Ireland

"In a country like Ireland with a population of 4.4 million and a workforce of just over 2 million, 47,000 jobs is very significant," he said. "There are people who've lost jobs in every part of Ireland. In every community, retail employment has been hit."

A looming general election and the implementation of stringent budgetary measures in the New Year will no doubt have an impact on the spending habits of the Irish people. But the real challenge facing the retail and restaurant sector will be staying open and staying in business.

Author: Lynsey Kiely, Dublin (mz)
Editor: Rob Turner

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