Irish consumer sentiment as crashed to a near five-year low amid growing fears that Britain will leave the European Union without an agreement. Fears that a no-deal Brexit could prompt an economic slump has made consumers more sensitive in recent weeks, according to the latest KBC Bank of Ireland/ESRI consumer sentiment index.
The UK is witnessing a “Boris bounce” as household income, spending and wealth rose at the start of the year.
In Ireland, consumer sentiment plummeted to 85.1 in July from 90.5 previously, according to the index reading.
Austin Hughes, an economist at KBC, said Dublin was suffering from a case of the “Boris blues”.
He warned that consumers had taken notice of the hardline Brexit stance emerging out of London since Mr Johnson became Prime Minister.
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The consumer sentiment index slump has been branded the ‘Boris blues’
“In part, it may reflect the fact that Brexit is not of Irish consumers’ making while some of those UK consumers who voted for Brexit may believe it will have a positive economic effects or may feel adverse economic effects may be outweighed by other consequences,” he told the Irish Times.
Mr Hughes said the scale of the recent financial crash in Ireland has left consumers scarred and made them focus on the potential risks of a repeat scenario on their income.
“It is noteworthy that a substantial part of that relative improvement in Irish household income has occurred in the period since the UK’s Brexit referendum,” he added.
“However, through this same period, Irish consumers have become increasingly concerned about the risk that Brexit could prompt a renewed and substantial deterioration in their economic circumstances.”
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Britain’s Office of National Statistics said on Monday that “all main measures of economic wellbeing increased” in the first three months of 2019.
All-time highs were recorded as household spending increased 1.2 percent per head, while families’ income adjusted for inflation and after taxes rose by 1.8 percent, compared to the same period last year.
Per capita net wealth also rose an an unprecedented pace as the value of financial the assets held by individuals net of liabilities rose by three percent.
The figures were largely driven by increased values of equity, investment fund shares and pensions schemes.
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Howard Archer, chief economic adviser at EY Item Club, told the Financial Times: “Consumers have been the most resilient sector of the economy, and have played an important role in preventing an even weaker performance over the first half of the year.”
The current uncertainty surrounding Brexit, however, has hindered consumer confidence in Britain because of the prospect of a weakened economic outlook.
The ONS, using European Commission figures, said in the first quarter that the number of people expecting rising unemployment rates in the year ahead has climbed 23.1 percent.
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Amanda Mackenzi, chief executive of the Business in the Community charity, said: “With a no-deal Brexit looming, the UK is arguably at its most crucial juncture for a decade and it’s no surprise that people feel less secure about their jobs and the broader economic picture.”
Yesterday it emerged that Mr Johnson is planning to visit Paris and Berlin ahead of the G7 summit in Biarritz this month.
The Prime Minister doesn’t want Brexit to dominate his debut on the world stage, which is likely with Emmanuel Macron and Angela Merkel due to attend the event.
Angela Merkel is also expected to meet the Prime Minister before the summit
He is yet to meet any of the EU’s leaders since winning the keys to Downing Street, but has held discussions with a number of senior figures over the telephone.
Leo Varadkar, the Irish prime minister, has signalled he is willing to meet Mr Johnson after the G7 summit.
But no official plans have been discussed between Downing Street and Dublin yet.