Confidence dips as tough Budget looms
THE prospect of another tough Budget and the uncertain economic climate have combined to sap the confidence of consumers.
Householders are increasingly nervous about the upcoming Budget and worried that the scale of adjustment may be higher than previously anticipated, the latest KBC Bank/ESRI consumer sentiment index shows.
The latest consumer sentiment index fell to 53.3 in September from 55.8 the previous month. The September reading for the index was the lowest since February of this year.
Dr David Duffy of the Economic and Social Research Institute said householders were rattled.
"The majority of consumers expect that the household finances will deteriorate, unemployment will rise and economic situation will become worse over the next 12 months," he said. However, Irish consumers may not have as sharp a fall as others in Europe or the US because consumers here already had a "fairly downbeat view" of the general economic outlook, KBC Bank's Austin Hughes said.
Some Irish households may also have taken comfort in the "less threatening future trajectory for interest rates and oil prices", while others may find it comforting that Ireland is not alone in suffering economic problems.
Oil prices have been falling on international markets as suppliers drop prices amid fears of a global downturn. And there are hopes that the ECB may be forced to cut interest rates to stimulate growth in the eurozone, in a move that would benefit mortgage holders here.
Mr Hughes said Irish consumers might believe a global financial problem would be dealt with more quickly and less painfully than a national one.
Last week in the US, Finance Minister Michael Noonan said the cuts and hikes in the next Budget may be higher than originally planned.
Mr Hughes said: "It is not surprising that Irish consumers became gloomier during September. A worsening economic outlook abroad and significant layoff fears at home represented a fairly threatening combination of events."