Consumer spending power to increase over next two years
IBEC's latest edition of the Irish Consumer Monitor forecasts improved consumer sentiment in 2013
Print13 February 2013
Consumer spending power is set to stabilise in 2013 and improve in 2014, according to IBEC. Publishing the latest edition of the Irish Consumer Monitor, the employers’ group said that mortgaged working households would see the greatest gain in their spending power this year on foot of low mortgage interest rates, while unemployed households and those in fixed incomes would fare worse. However, the deal on the promissory notes is better than expected and could significantly boost consumer confidence.
IBEC senior economist Reetta Suonperä said that the main cause of the unemployment crisis is the lack of consumer confidence and weak domestic demand. "Getting people back to work is the priority, but to do this we need a return to more normal, sustainable consumer spending levels. Consumer fundamentals have now stabilised and the promissory note deal could provide real momentum to consumer confidence. The private sector began to add jobs during 2012, a tentative bottoming-out of house prices means that household net wealth is no longer falling and debt levels are starting to ease, albeit from high levels.
"In the absence of further bad news, consumer sentiment should recover during 2013. However, any unforeseen shocks pose a risk to the fragile recovery seen to date. It appears that the worst is now over for the consumer market, but a more substantial improvement in consumer fundamentals and sentiment is required before we see a robust growth in consumer spending."
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