Covid resurgence sparks fresh slump in confidence

Consumers on Dublin's Grafton Street

Consumer confidence deteriorated this month as people became increasingly concerned about their household finances and job prospects amid a second wave of the Covid pandemic and a move into another nationwide lockdown.

The latest monthly consumer sentiment index, from KBC Bank Ireland, shows confidence to be at its lowest level since May.

However, KBC chief economist Austin Hughes said it seems that “fear, rather than fatalism, is gripping Irish consumers at present”.

"It appears that consumers sense a very palpable link between lockdowns and layoffs," Mr Hughes said.

He said that a lack of negative reaction to this month’s budget, which saw the Government splurge a record near €18bn to protect the economy from the twin threats of Covid and Brexit, suggested an even bigger stimulus package could have been made.

“While the stance of fiscal policy in Budget 2021 was entirely appropriate, a somewhat larger size of stimulus might have offered greater support both in signal and substance to Irish consumer sentiment and spending through the remainder of this year and into next. Importantly, this might suggest fear rather than fatalism is gripping Irish consumers and holds out scope for a positive response to further supportive measures in the future,” Mr Hughes said.

"A silver lining in the October survey may be signs of resilience in buying power that may suggest the possibility of a significant bounce back in consumer spending in the final weeks of the year," he said.