Unleashing power of consumers can drive recovery
But a raft of new taxes and a dearth of bank lending will destroy any green shoots
You have to look a little closely to spot them, but Tuesday's retail sales tell us three important things about the economy: that the Irish consumer is a giant with awesome power that, if unleashed, could drive a vibrant recovery, that population growth is what gives this giant its power and that too much taxation and too little credit are holding it back.
In Britain and Germany, where banks are working and taxes are falling, consumer confidence is now back to pre-crisis levels. The same is true in Ireland. But here core retail sales are down 13.5 per cent on 2007 so while confidence is back to pre-crisis levels, spending is not. Spending is growing again and even picked up at the year end with a 3 per cent December rise beating the 0.7 per cent average for 2013. That pick-up should help recent forecasts of Ibec and the Central Bank – for growth of 2 per cent or more this year – to become a reality.
But consumers could be doing much more, just look, for example, at the rate of growth in furniture and lighting in December: up a staggering 21 per cent in just 12 months, this shows what a very modest upturn in housing market activity can achieve. Now imagine a sustained upturn. Three other increases over that period – the 5.4 per cent rise in clothing, footwear and textiles, the 6.2 per cent rise in electrical goods and the 7.6 per cent rise in motor sales – all have one thing in common: they are driven by population growth.
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