Confidence setback as Budget added to our woes
THE harsh Budget added to the woes of households and forced consumer confidence downward last month.
New figures show that the confidence of households took a big knock in November, despite hitting a high the previous month. Consumer sentiment fell to 71 in November from 76.2 in October, according to the KBC Bank/ ESRI index.
Austin Hughes of KBC Bank said the fall indicated that the recovery in the economy was still fragile. "So far this year, we have seen six monthly increases in the survey, and five monthly declines. This is a pattern that highlights the tentative nature of the turnaround as it is being felt by the average Irish consumer," he said.
However, even though the survey indicates that people reassessed their financial situation after the Budget, it also showed a positive change in general outlook for the economy. Mr Hughes added: "This might suggest that consumers feel Budget 2014 moved the economy as a whole in the right direction."
The economist said the weaker assessment of personal finances occurred in spite of greater optimism on jobs, as well as the European Central Bank's decision to cut its key policy rate in early November.
He said consumers were hit financially by the Budget 2014 measures, which had a big impact on health insurance costs. Having to pay next year's property tax this year also hit the financial confidence of households.
Because of these, it was not entirely surprising that the November sentiment results were down, Mr Hughes said.
"As consumers gradually come to terms with Budget 2014 measures, there may even be some prospect of a slightly better trend in spending as 2013 ends. However, the November survey suggests that any upswing is likely to be relatively modest," he added.