Northern Ireland

Northern chill as VAT set to drop in Irish Republic

Image caption Eating out is set to get cheaper in the Republic

It is quite possible diners used to Dublin's city centre restaurants have been waiting for Friday, in the hope of paying a little less.

From the first day of July the VAT rate in restaurants, hotels and other tourist venues in the Republic of Ireland will drop to nine per cent.

Paul Cadden of the Restaurants Association of Ireland said it would be a big help to a struggling industry.

It will not mean more money for the restaurant owners, but will mean slightly lower prices, and ought to encourage more paying customers in through the door.

Meanwhile Bob McCoubrey is greeting his lunchtime diners at his restaurant on Belfast.

The VAT rate in the UK is 20%, and restaurant owners like him in Northern Ireland are looking jealously southwards.

"It gives them a huge advantage," Mr McCoubrey said.

"We need a similar reduction not just to help restaurant owners, but also our struggling tourist industry."

The Northern Ireland Hotels Federation is worried too.

It points out that comparable VAT rates in France and Spain are at just 5% and 8% respectively, meaning businesses in Northern Ireland cannot compete.

Now their nearest competitors - hotels in the Irish Republic - are charging only 9%, the situation seems even worse.

The UK Treasury is understood to be looking at VAT rates.

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