Poll reveals record levels of fear for our future
The people are stunned by their drop in living standards and deeply pessimistic, writes James MacCarthy-Morrough
Our Economic Outlook Monitor paints a dismal picture of the public's view of their own -- and the country's --financial well-being on the eve of the general election.
Today's survey, taken in mid January (before the USC and other tax changes appeared in payslips), reveals a population stunned by their drop in living standards and deeply pessimistic about their prospects for the year ahead.
Compared to this time last year, almost seven in 10 Irish people (68 per cent) believe they are worse off; this is slightly more than the previous low point of 66 per cent recorded after the April 2009 emergency budget.
Contrast this with our outlook in mid September 2008: our fool's paradise is revealed by the fact that people were evenly divided then on how well off they were compared to the previous year, and a net 9 per cent (those who think they will be better off minus those who think they will be worse off) expected to be better off the following year!
Now, the financial gloom, sadly, is all pervasive. In every age or class group, a majority think they are worse off. However, throughout this crisis, the most affluent (AB) social class have tended to be the most likely to say they are worse off.
Clearly, the increases in marginal rates of taxation and other harsh budgetary measures are impacting most on those who are supposed to "have the most" -- although, in truth, everyone else is not far behind in sharing the pain.
The current levels of financial pessimism are unprecedented and far greater than anything else recorded in our data series -- which stretches back to 1989.
A backward glance shows us the success of Fianna Fail irrespective of the economic weather. In 1989, there was a small net positive in terms of financial well-being (+4 per cent), and FF was returned to power. Three years later, following the currency crises of 1992, twice as many people felt they were worse off than better off (34 per cent versus 17 per cent). Nevertheless, a net 14 per cent believed they would be better off the following year, revealing a remarkably resilient strain in the Irish outlook, despite a very poor economic climate.
By 1997 things were on the up, with a net 24 per cent believing they would be better off next year. But this wasn't enough to save the Rainbow Government.
In 2002, the economy was motoring and a net 8 per cent thought they were better off than last year. Twice as many again thought they would be better off next year.
Since September 2008, the pattern is unrecognisable from that which accompanied FF's election victories since 1989.
The outlook for the country as a whole hit an amazingly negative 80 per cent in January 2009, but appeared to be improving, albeit slowly, up to March 2010, when one in four thought things were going to improve. Those tentative green shoots were dashed when the full cost of the Anglo Irish Bank bailout became apparent, by September 2010.
In January 2011, just 12 per cent thought things would improve over the next 12 months, while 54 per cent believed they will get worse.
So how long will all this pain last? No good news here either: two in three think we will be in recession for three years or more, revealing an acceleration in gloom since September and March 2010.
Will domestic spending help turn things around anytime soon? Well, some improvement on this measure can be noted: three in 10 think this is a good time to buy, compared to just one in four in 2009. Yet we are more cautious than in March 2010, when 36 per cent thought it was a good time to spend.
Unfortunately, the almost four in 10 who say it is a 'good time to wait' is right back to early 2009 levels, revealing that a great many consumers remain reluctant to spend in such volatile economic times. Interestingly, the one social group who seem to be escaping the deflationary spiral are farmers -- 41 per cent of whom think now is a good time to spend. But in general, consumers simply do not have the means to start spending in any significant numbers.
Since September 2008, the public's view of how the Government is handling the economic situation has gone into freefall. Sixty-eight per cent of Irish adults now rate the handling of the economy as very poor; just four per cent rate the performance as good
So, overall, where are we headed as a country? Three in four say the 'wrong track', putting us right back at the January 2009 level. A minority, one in five, said that we were headed in the 'right direction' by March 2010. But such confidence has halved since then.
With these record levels of financial fear, one of the first tasks of the new Government will be to convince people that we are on a different track to a new future.
James MacCarthy-Morrogh is account director with Millward Brown Lansdowne