Consumer sentiment falls to 6 year low on Brexit fears
Consumer sentiment here fell to a six-year low last month, the third month in a row in which it has fallen.
According to the KBC Bank Ireland Consumer Sentiment Index, Brexit uncertainty continues to drive people’s confidence in the economy and their personal finances lower.
“While the drop in confidence in September was notably smaller than in either of the two previous months, it was still sufficient to push the sentiment reading to its lowest level in nearly six years,” said KBC Ireland’s chief economist Austin Hughes.
“The last time the KBC sentiment index was lower than at present was in November 2013 when the index stood at 71,” he added.
September was also the first time since February 2017 that the survey of a representative sample of 1,000 adults found more consumers felt their household financial circumstances had worsened rather than improved over the last year.
The fall in confidence here contrasts with small improvements seen elsewhere in the globe, including the US, the Euro area as a whole and in the UK, with the differences attributable to two factors according to Mr Hughes.
“First of all, in terms of the factors influencing confidence among Irish consumers at present, it seems that Brexit concerns are not the main issue, they are the only issue,” he said.
“In the same vein, unlike their counterparts in other countries where the mood of consumers is being buffeted by uncertainty, Irish consumers appear now to be almost exclusively on downside risks.”
Consumer thinking here may also reflect scarring from the painful experience of the previous downturn, he added.
The data comes a day before the announcement of Budget 2020, where people traditionally expect some sort of measures to be unveiled that will give their finances a lift.
Three out of four of those questioned in the survey said any change to tax and welfare in the Budget would be important to their personal financial circumstances.
Nearly half of people looking to buy a home said their purchase prospects would worsen if the ‘help to buy’ scheme was ended.
One third of those suggested they would be prevented from buying in such a scenario.
There is a growing expectation that the Government will announce an extension to the scheme in tomorrow’s budget.
Mr Hughes said consumers will likely look for signs from the Budget that the economy and the public finances will not be devastated in the way they were eleven years ago.
He also suggested that consumer sentiment here, along with the economy, could be approaching a pivot point as Brexit negotiations approach decision time.
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