A leading economist has warned of an exodus from Irish main streets in 2019, with traditional shopping spots to become saturated with an unsustainable number of coffee shops and restaurants.

It comes on the back of a rise in shoppers looking online for retail bargains and CSO data showing increased Border-hopping.

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Economist Jim Power has warned that tax burdens on the squeezed middle, as well as increased housing costs and domestic charges, will leave families no choice but to abandon the high street in search of value elsewhere.

He warned Irish retailers have faced increasing pressures over the past 12 months to keep their doors open but this will become too much for many businesses in the New Year.

It will lead to a situation similar to what has happened in major UK towns and cities where businesses have abandoned running expensive high street stores in favour of boosting operations online.

Retail Ireland has acknowledged Ireland’s high streets are changing and further adjustment is likely to occur in to 2019 because of cost pressures on businesses and the impact of continuous discounts on their bottom line.

It said “erosion” of traditional marketplaces is likely but is not expected to be as drastic as in the UK.

Retail Ireland director Thomas Burke said: “We have an economy here that is growing at about 7pc, so all the economic fundamentals are good from an Irish retail perspective but that is not to say we don’t have a number of challenges.

“Some of the changes we are seeing on the high street towards food services and other use of space is a result of an erosion of the competitive position of the retail sector in the Irish market over the last 12 or 18 months.

“We have seen very significant increases in operating costs. Areas like rent, commercial rates, labour costs and the challenge in that environment is that we are not getting that cost recovery in the Irish market at the moment.”

Mr Power has warned high street retailers face an increasingly pressurised future in 2019.

“You will see more [price] reductions and that is indicative of a changing nature,” he said, adding that the exodus from the high street will continue. “You are going to see more coffee shops and restaurants open up and fewer ‘bricks and mortar’ retailers. That’s what the high street is going to become increasingly dominated by.

“The retailers that will continue to survive are those that will build their online presence, because online does not have to be Amazon or overseas stuff, it can be domestic as well.”

Mr Burke said Irish businesses with an online presence are performing well and Retail Ireland expects 3pc growth on retail sales during the Christmas period compared to last year.

However, Mr Power warned this will be followed by a challenging 2019. The increased presence of coffee shops and food outlets will be unsustainable, he added.

“It will we reach saturation point, absolutely. I don’t think we are far from it but just because we have not reached it doesn’t mean it’s not going to get worse. We will see a lot more opening in the next year or two and then the reality will strike.

“For retailers, it’ll be a good Christmas in terms of sales and volume but in terms of actual cash receipts, it will be very pressurised for retailers.”

Next year will also bring increasing pressures for the squeezed middle. Mr Power said that is was essential that the Government brings in tax relief.

Figures released by the Central Statistics Office last week showed shoppers spent almost €500m on shopping trips north of the Border in the year to March 2018. Yet Mr Burke said retailers expect to do well today and tomorrow as people round off their Christmas shopping. He hopes this bodes well for next year.

“In the UK, you have an economy that is not performing well and a significant over-supply of retail space.

“What we have seen by Irish retailers in the past six months is a move into the online world and I think that is paying off.”

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