Tuesday 22 August 2017

Bounce in confidence on the back of hopes of a soft Brexit

Theresa May
Theresa May
Charlie Weston

Charlie Weston

THE confidence of consumers bounced in June, following the outcome of the British election.

Consumers have concluded that the uncertain nature of the result means a softer Brexit could be on the cards.

The KBC Bank/ESRI consumer sentiment index rose to 105.0 from 100.5 in May.

It was the highest level the index has seen in almost a year-and-a-half.

There are also signs that the building strength of the economy here is easing fears about the economic outlook.

Sentiment around household finances has also improved, but a large majority of consumers are still not feeling the gains in their own finances.

KBC Bank economist Austin Hughes said the higher levels of confidence are related to the outcome of the British election.

"The monthly increase may reflect a sequence of positive reports on the Irish economy and a sense that the outcome of the recent UK election may lessen the threat of a 'hard Brexit'," he said.

There may also have been some positive impact from extremely low inflation and the start of summer sales, as well as the conclusion to public sector pay talks.

The increase in June consumer sentiment was notable in that all five main elements of the survey posted monthly increases for the first time since January, Mr Hughes said.

He added: "It could be that the June 'bounce' owes something to a reassessment of Irish economic and financial conditions as a new Taoiseach prepared to take office at the end of the survey period, but we think variations in the scale of improvement in the different components of the survey hint that other specific factors played important roles."

June also saw an improvement in consumers' assessments of their personal finances, with 28pc reporting an improvement, compared to 21pc reporting a deterioration.

But consumers did not upgrade their expectations for their future spending power to anything like the same extent as other components of the survey.

However, there was some improvement in spending intentions in June. This likely corresponds to the start of the summer sales, Mr Hughes said.

Irish Independent

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