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Tone of negotiations will influence household spending

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Austin Hughes: recovery more properly characterised as an easing in financial pain Picture: Gerard McCarthy

Austin Hughes: recovery more properly characterised as an easing in financial pain Picture: Gerard McCarthy

Austin Hughes: recovery more properly characterised as an easing in financial pain Picture: Gerard McCarthy

Consumer confidence picked up slightly in March, but the Brexit negotiations are set to be a key factor that determines household spending in the months ahead.

The small rise in consumer sentiment comes despite continuing strains on the finances of many households.

The KBC Bank/ESRI consumer sentiment survey rose to 101.9 in March, from 100.7 the previous month.

Economist Austin Hughes said the consistent message of the survey was that households were experiencing an easing of the financial pain, rather than a rise in prosperity.

He said the way that the Brexit negotiations panned out would be a major influence on household spending.

"In the absence of major domestic developments in the next couple of months, we think the major influence on Irish consumer sentiment could be the tone of initial Brexit negotiations."

He said consumers would be watching to see if there was a conciliatory or hostile tone to the talks.

The uncertain economic outlook means consumers remain cautious.

The survey found that there was a weakening in spending intentions.

Daniel Foley of the Economic and Social Research Institute, which compiled the survey, said the trend in sentiment for the first three months of the year looked to have stabilised following a downturn towards the second half of last year.

"The results this month indicate that perceptions of personal financial situations compared to last year in particular have improved," he said.

"This result is consistent with the continuing fall in the unemployment rate."

He said that the buying climate continued to decline as consumers were cautious about making large purchases.

And consumers are sceptical that the improvements in the economy will deliver improvements in their living standards.

Mr Hughes of KBC Bank said: "From the perspective of the average consumer, Ireland's economic recovery is more properly characterised as an easing in pain than an increase in prosperity."

Irish Independent