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CONSUMER SENTIMENT remained virtually unchanged in August, with shoppers still fearful about their future earnings, according to data published today – which warned the government that another austere budget could mean ‘breaking point’ for the economy.
The KBC Bank/ESRI Consumer Sentiment Index stood at 55.8 for August, effectively unchanged from the 55.9 value measured in July – though the rolling three-month average slipped from 57.2 down to 56.
While values above 50 indicate a generally growing economy, the levels are still a sign of continued unease among the public, who are fearful of spending too much in case their own situations deteriorate.
Austin Hughes of KBC Bank said the drop in buying intentions were a sign of how fragile Irish consumer sentiment was at present, but noted that the index was still well above its all-time low of 39.6 recorded in July 2008.
There was also some cause for optimism, given how the outlook appeared to remain stagnant in the face of deteriorating measures elsewhere in the world.
A similar survey in the US saw a drop of eight points in the last month, while the Eurozone consumer sentiment index recently recorded its largest single-month fall since 1990.
The data also showed that the buying climate had worsened significantly in the last few months, despite a relative increase in the average consumer’s personal circumstances.
Hughes warned that the “short sharp shock” of frontloading budget adjustments may no longer be the most appropriate model for delivering a budget, as fragile sentiment meant that a fifth successive austere budget could push the economy to breaking point.
At that point, he said, additional austerity “weakens, rather than strengthens, the adjustment process” – meaning it may be more sage for the government to under-promise, and then over-deliver, on its targeted cuts for the December budget.
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Reality check – the economy is already at breaking point, as are a huge number of the citizens who live in this ‘wonderful’ society/economy or whatever it’s called.
Don’t know about anyone else, but I’m stretched to the limit already. More cuts will be the straw that breaks the camels back, will also be majorly counterproductive, what we need is some confidence in the economy so people will begin to spend again, don’t see that anytime so though!!!!
I doubt the government will listen to the warning.
How many front loaded budgets will this have been, and isn’t that just another posh way of saying, ‘ Lets screw the f*****s again !
Well if this is coming from Austin Hughes I’d seek a second opinion. This so called economist appeared on a prime time debate with David McWilliams in 2003 using figures and forecasts to explain why the housing bubble was going to continue. McWilliams explained how the banks were in over their heads, guess who was right.
If it was 2003 that he predicted the bubble was going to continue, he was right. It continued until 2007.
4 years is a long time in these sort of predictions.
McWilliams was a broken-clock economist.
By 2003 it was already a bubble. A long period of very low ECB rates combined with ever more reckless lending by the banks just meant it had until 2007 to grow to gigantic proportions before it eventually burst.
Yet again I am going to say that you cannot tax your way out of a recession & no amount of austerity cuts, front loaded budgets or whatever the government wants to call it is goin to do this country any good. Or any of the other bailed out countries. The sooner the euro goes the better. We are barely able to pay the interest on the billions of loans. Debt forgiveness is the only answer.
Ann, you are spot on!
I think people are so worried about what the future holds that, even if they are in the enviable position of having a bit of extra cash, they are tucking it away and are in no hurry to spend. I think every purchase is pondered over and there’s a lot less impulse buying. I’d imagine that this trend will be even more prevalent after the next budget which will cause an ever greater downward spiral.
“it may be more sage for the government to under-promise, and then over-deliver, on its targeted cuts for the December budget.” A lovely way to say the Government should LIE.
The government can’t see what is happening to the ordinary Joe soap ie me and you. There is No money for property tax, water rates, septic tank charges etc. WHERE are we to get it from? Take home is cut way back and will be hit again. Hospitals are at breaking point (I know!!). Schools can’t absorb any more cuts either. There are incidents of overcrowding in schools and I know of a class of 20 fourth years who have no one to teach them at one point during the day due to cutbacks.
have your say