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Retailers are fearful that weak sterling will help fuel a surge in online shopping at UK websites in the run-up to Christmas – exacerbating the disastrous impact the pandemic has had on their businesses.

The value of sterling plunged this week as talks between London and Brussels on a trade deal faltered, making it more attractive for shoppers to splurge on goods from UK-based websites.

The currency swing has also prompted fresh concerns that consumers here could flock to Northern Ireland to do their shopping in the coming months as volatility persists.

The Government is being urged to roll out a major advertising campaign to encourage people to shop local, both physically and online.

“A lot of companies are still in survival mode,” said Arnold Dillon, director of Retail Ireland, which is part of business lobby group Ibec.

“An additional Brexit shock is something that could be incredibly disruptive and potentially push more firms out of business.

“With the exchange rate, we’ve been in this sort of ­territory before.

“There would be a risk with potentially significant volatility in exchange rates over coming months.

“What we would really want to desperately avoid is a situation where we see a return to very significant cross-border shopping.”

Shoppers flocked to Northern Ireland in 2009 when the euro neared parity with sterling. At its peak, 4.1pc of grocery sales to shoppers here were accounted for by retailers in Northern Ireland – about 10 times the figure that would be normally seen.

But it’s the impact of any surge in online shopping from sites such as Amazon in the coming months that could spell huge trouble for Irish retailers.

For many small retailers especially, Christmas can be a make-or-break time, helping them to turn a corner to profitability for the year.

But the pandemic coupled with the sterling plunge could play havoc with their businesses. Consumers here are likely to face paying tariffs on goods bought from the UK from January, which could see many use the coming months to capitalise on the strength of the euro and make purchases before any tariffs are imposed.

The UK’s Brexit transition period ends in December, and it looks increasingly likely that a trade deal with the EU won’t be agreed.

Duncan Graham, the managing director of Retail Excellence Ireland, a lobby group that represents more than 2,000 retailers, said he reckoned many retailers here had done about five years’ work in boosting their online presence in the past five months.

But he warned that shoppers needed to be encouraged to shop local and pointed out that 75pc of online purchases made by consumers in Ireland were made outside the country.

“About 75pc of online purchases go out of the State,” he said. “Buying local is really important between now and Christmas.”

City centres in particular have been hit hard, with many businesses that relied on footfall from office workers and shoppers left reeling as home working becomes the new normal.

“What we have seen since lockdown is a real passion for local community and passion for doing the right thing by buying Irish,” according to Mr Graham.

“It’s all very well and good shopping local in the middle of the summer, but it’s a bit more difficult when it’s cold and miserable in December and you’ve got your laptop in front of you,” he added.

“The message here is to think about what you’re doing and keep it in the country.”

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