Booking a table is the litmus test of confidence
Published 02/06/2015 | 02:30
When Ireland exited the bailout, Ministers Michael Noonan and Brendan Howlin were asked how it would impact on weak domestic demand, as consumers struggled to throw off the crisis.
"Try booking a restaurant in Dublin tonight," said Mr Howlin. The suggestion was that the data lagged the reality, and that consumer confidence was picking up again, with restaurants in the capital, offering cut-price deals during the height of the crisis, seeing increased demand.
Fast-forward a year and it was clear that domestic demand was indeed making a comeback.
Last year, it made a positive contribution to growth for the first time since the crisis, a crucially important milestone as it showed growth was broadening and the recovery was becoming more balanced.
Our all-important export sector weathered the crisis years as domestic demand lagged. But for an economy to grow and thrive, consumers need to have the confidence to spend.
And confidence isn't short term. Consumers will hold off buying that new car or other big-ticket item if they feel their household finances might be at risk.
Faster growth rates, a declining deficit and, importantly, the fall in unemployment are helping to push a greater feel-good factor. But, as pointed out in the consumer monitor report, this feel-good factor isn't spread evenly.
Dublin is feeling it, but parts of rural Ireland may still remain lukewarm as the employment gains, for example, haven't been spread evenly. The jobless rate fluctuates between regions. But, while the figures may lag behind Dublin, they have improved on their position of 12 months ago. The challenge for the Government, both politically and economically, is to sustain that improvement, and with it, the rise in confidence.