Warning over 'animal spirits' having impact on spending
A new study has established a link between consumer confidence and spending in Europe and the United States and says this needs to be taken seriously when looking at economic forecasts.
The study by the Netherlands Central Bank (DNB) has direct lessons for policymakers here as the uncertainty over Brexit has hit consumer confidence and risks spilling over into the wider economy if Britain leaves the European Union without a deal on October 31.
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The study mapped confidence measures against a range of economic and market indicators including household spending, house prices, income, unemployment and market measures across the EU, United States and Norway.
"Our results suggest that animal spirits exist and may have a considerable impact on spending growth, both in Europe and the US," the report published last week said.
According to the Economic and Social Research Institute, consumer sentiment fell in late 2018 as "Irish consumers became more fearful as the Brexit deadline drew close".