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Friday 28 July 2017

Poll: now we're ready to spend

Public to splash out on luxuries but still careful

The increased momentum in consumption is mostly driven by younger people living in the greater Dublin area, but is also evident in Munster, and is primarily among the better-off social groups. (Stock photo)
The increased momentum in consumption is mostly driven by younger people living in the greater Dublin area, but is also evident in Munster, and is primarily among the better-off social groups. (Stock photo)
Jody Corcoran

Jody Corcoran

The public has loosened its purse strings and intends to start spending again, according to a Sunday Independent/Kantar Millward Brown opinion poll.

The poll finds that discretionary spending has increased significantly and is set to rise even further in the year ahead.

It also finds there has been a sharp drop in those who say they will have to tighten their belts over the next 12 months.

Discretionary spending is money spent on non-essential purchases, such as holidays or a luxury item.

It represents the amount of income remaining after a person pays for personal necessities and taxes.

In the year ahead, three-quarters of people say they intend to spend the same or more than they did two years ago.

The increased momentum in consumption is mostly driven by younger people living in the greater Dublin area, but is also evident in Munster, and is primarily among the better-off social groups.

Read More: Consumers now feel more buoyant but they don't want to rock the boat

This weekend's poll supports findings published last week which revealed that the public's confidence about their personal finances has soared to a level higher than throughout the Celtic Tiger period and is now at its highest point in 28 years.

However, this poll also tempers that finding somewhat in that it reveals a level of consumer caution underlying the new-found optimism.

Almost half (44pc) of those polled have held steady and have not increased discretionary spending in the past two years.

But a significant minority, almost a fifth (19pc), now spend more than they did two years ago on non-essential items.

However, the poll finds that in the year ahead people intend to spend the same and, in some cases, significantly increase spending across a range of consumer categories.

These include home improvements, to holidays in Ireland and abroad, to going to the pub, and on alcohol and eating in restaurants. In other findings, today's poll also reveals that while Ireland's relationship with the European Union remains strong, only half (51pc) of respondents believe the EU will respect the country's "special position" with the UK in the Brexit negotiations.

A sizeable one-fifth (20pc) disagree that Ireland's position will be respected by the EU, while, separately, a further three-quarters (73pc) believe the EU has more control over the country's economy than the Government.

However, it is the findings in relation to discretionary consumer spending that will most encourage the retail sector at the cutting edge of what is often referred to as a 'real economy'.

The news is not all encouraging though: the poll finds the public believes there is less value for money in the hospitality sector than there was in 2012.

It also finds that while service in the retail sector and in pubs/clubs has improved, it has fallen back notably in hotels and restaurants.

The poll finds 19pc of the public has increased spending on discretionary goods and services - up from 7pc in 2012.

A breakdown shows that 32pc of 18-24 year olds, 25pc of those aged 25-34 and 23pc of those aged 35-44 have increased spending, as well as 27pc of those in Dublin.

The poll also reveals that 28pc have decreased such spending - down massively from 62pc in the same two-year period.

This poll also asked whether people thought they would spend more, less or about the same in 12 categories in the year ahead.

The results reveal an intention to increase spending across all categories.

However, discretionary cash will be mostly funnelled into savings and investments as well as on home improvements, which again reflects a residual level of caution.

But there is still a significant increase in those who intend to spend more on entertaining at home, weekend breaks in Ireland, groceries, clothes, foreign holidays, going to restaurants, mobile telephone bills, impulse purchases, going to the pub and on alcohol (see page 5).

Similarly, there has been a notable increase in the number of people who say their spending habits will remain unchanged in the year ahead.

The poll also finds a corresponding overall sharp drop in those who intend to cut back or reduce spending. For example, four years ago 50pc said they would reduce spending on home improvements - now 16pc intend to reduce such spending; more than half (56pc) said they would reduce spending on weekend breaks - now 19pc say they will; 58pc said they would cut back on clothes shopping - now 19pc; 57pc said they would reduce spending in restaurants - now 21pc.

On Europe, 75pc agree that the EU has been good to Ireland since the country joined the EEC in 1973, falling back slightly to 71pc who agree, on balance, the EU has been good to this country in the past 10 years.

However, a similar 73pc believe the EU calls the shots on economic policy in Ireland, while just over half (51pc) believe the EU will respect Ireland's position on Brexit.

Opinion is divided on what the future holds for Ireland in the EU: 28pc believe Ireland's relationship with Europe will strengthen over the next five years while 23pc believe it will weaken and 36pc say it will remain the same.

Nearly one in four (23pc) feel the UK will benefit more from Brexit than the EU (15pc), with 25pc saying there will be no winners.

Sunday Independent

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