Irish consumer sentiment weakened notably in July, as the increased risk of a no deal Brexit and 'Boris blues' prompted a 'notably gloomier' assessment of the ‘macro’ outlook, research shows.
According to the recently published KBC Bank Irish Consumer Sentiment report, the July reading was the weakest since November 2014 and marks a disappointing result after modest gains through the two previous months appeared to hint that confidence might be set on an improving trend.
‘Boris Blues’
The analysis suggested that while the July confidence reading for the UK hints at a ‘Boris blues’, it appears Irish consumer sentiment suffered a ‘Boris bump’.
“Our sense is that the combination of a tougher line and no specific solutions espoused by Boris Johnson (the overwhelming favourite and most of his opponents) in the race to become leader of the Conservative party and Prime Minister of the UK was the key driver of the drop in Irish consumer sentiment in July,” suggested Austin Hughes, chief economist, KBC Bank Ireland
‘Range Of Influences'
KBC pointed out in its report that it previously noted that Irish consumers appear to be markedly more sensitive to emerging downside risks around Brexit than their UK counterparts, which it said ‘may be the result of a range of influences.’
“In part, it may reflect the fact that Brexit is not of Irish consumers making while some of those UK consumers who voted for Brexit may believe it will have positive economic effects or may feel adverse economic effects may be outweighed by other consequences,” said Hughes.
‘Scarred Consumer Thinking’
Hughes highlighted that the scale of the recent crash in Ireland has likely scarred consumer thinking and made consumers inclined to focus more closely on downside risks to incomes.
Despite this, the report showed that the spending power of the average person (as measured by aggregate household disposable income per capita adjusted for inflation) is now stronger in Ireland than that in the UK relative to its pre-crisis 2007 level.
Improved Incomes
In a statement, the group said it was noteworthy that a substantial part of that relative improvement in Irish household incomes has occurred in the period since the UK’s Brexit referendum.
However, the KBC findings showed, through this same period, Irish consumers have become increasingly concerned about the risk that Brexit could prompt a renewed and substantial deterioration in their economic circumstances.
© 2019 Checkout – your source for the latest Irish retail news. Article by Donna Ahern. Click sign-up to subscribe to Checkout.
