Subdued consumer sentiment remains in Ireland

27 Feb 2020

Irish consumer sentiment remained muted this month, as household finance worries offset optimism surrounding the economy as a whole, according to a poll published on Thursday.

Ireland has remained the fastest growing economy in the European Union over the Brexit negotiations. However, according to the authors of the survey, a large number of consumers have not reported any improvement in their finances from the buoyant economy.

Reuters reports the KBC Bank consumer sentiment index was 85.2 this month, slightly under January’s figure of 85.5.

Sentiment improved in other parts of the EU, and also the U.S., but KBC said Irish attitudes could be suffering from a “feelbad” factor as the recovery has “under-delivered” for many, reports Irish Times.

“Irish consumers effectively held steady as reduced nervousness about the outlook for the Irish economy broadly offset ongoing concerns about household finances,” said KBC.

“Consumers in the US and across the EU as a whole now see their glass as more than half full. In spite of some recent improvement, Irish consumers remain concerned about problems whether these relate to their current reality or looming risks. This translates into an Irish consumer sentiment reading that sees the glass as (more than) half empty.”

The index dropped to a seven-year low in October of 69.5, when it appeared the EU and Britain couldn’t come to an agreement on the Brexit withdrawal terms.

In January 2018, this index reached 110.4, a 17-year high, before consumer concern escalated over the possibility of a disruptive Brexit.

Chief economist at KBC Ireland, Austin Hughes stated: “Brexit concerns likely explained a significant element of the subdued tone of Irish consumer sentiment readings in recent years.

“However, those worries don’t fully explain the pronounced lack of any ‘feelgood factor’ among Irish consumers, an absence that might appear at odds with the sustained strength seen in key Irish economic indicators such as last week’s buoyant jobs data for the final quarter of 2019.”

Hughes went on to say. “It simply seems that progress at the level of the individual household from the conditions experienced through the ‘austerity years’ has fallen short of improvement heralded in much economic commentary,” he said, making reference to Ireland’s financial crisis 10 years ago.


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