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Consumer sentiment remains subdued in February

Consumer sentiment remained subdued in February as concerns over household finances largely cancelled out optimism around the economy in general, a new survey shows today.

Ireland has remained the European Union’s fastest growing economy during three years of Brexit talks.

But today’s survey shows that many consumers are not seeing an improvement to their financial circumstances from the buoyant economy. 

The KBC Bank Ireland consumer sentiment index was 85.2 in February, little changed from January’s 85.5.

In October, when it seemed that the European Union and Britain could fail to reach agreement on the terms of Britain’s withdrawal from the trading bloc, the index fell to a seven-year low of 69.5. 

The index hit a 17-year high of 110.4 in January 2018 before consumers really began to be spooked by the possibility of a disruptive Brexit.

A version of this is still possible at the end year if a favourable trade deal cannot be reached. 

The survey found that average household incomes have increased by 2.4% a year during the recovery years, but GDP has grown by an average of 10.8%. 

Meanwhile around 80% of Irish consumers do not think that the continuing growth in the economy will be of any benefit to them over the next year.

“Brexit concerns likely explained a significant element of the subdued tone of Irish consumer sentiment readings in recent years,” said Austin Hughes, chief economist at KBC Bank Ireland. 

“However, those worries don’t fully explain the pronounced lack of any ‘feelgood factor’ among Irish consumers, an absence that might appear at odds with the sustained strength seen in key Irish economic indicators such as last week’s buoyant jobs data for the final quarter of 2019,” the economist said. 

“It simply seems that progress at the level of the individual household from the conditions experienced through the austerity years has fallen short of improvement heralded in much economic commentary,” Mr Hughes added.

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