Irish consumer confidence at a six-year low as Brexit battles on
Decline in consumer confidence attributed to concerns over Brexit
Consumer sentiment in Ireland has fallen to a six-year low, as Brexit uncertainty continues to weigh heavy on the minds and pockets of consumers.
According to the KBC Bank Ireland Consumer Sentiment Index consumer confidence sank to 69.5 last month from 75.3 in September, the lowest level in over six years. The index stood at 93.5 a year ago.
“There is little doubt that the on-going decline in consumer confidence is largely as a result of continuing nervousness around Brexit,” said KBC Bank Ireland chief economist Austin Hughes.
“The key question is whether that ‘embedded uncertainty’ will continue to weigh on Irish consumer spending in the manner that it has since the Brexit referendum.”
In the last three years, growth in household spending has trailed household income by just over one per cent per annum. Before the referendum, it typically led by a similar amount.
“Spending hasn’t stopped, but it is notably slower than it might otherwise be,” said Hughes.
According to Hughes, this slowdown in spending can largely be attributed to the prospect of a no-deal Brexit.
"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," said Hughes.
"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."
Ireland’s Budget 2020 may have raised further concerns as consumers could be adversely affected by taxation and/or welfare changes, due to public finances being put aside to finance Brexit.