A new survey shows that business and consumer confidence has hit record lows in Ireland due to the twin threats of Brexit and the second wave of Covid-19.
The Bank of Ireland Economic Pulse came in at 56.6 with October marking a new low for consumer sentiment while businesses downgraded their near-term expectations for activity and jobs.
The index, which combines the results of the Consumer and Business Pulses, was down 8.6 on last month and 20.5 lower than a year ago.
The pandemic and Brexit were to the fore this month, with the entire country moving to level 3 when the survey was conducted and tensions between the UK and EU over future trading arrangements coming to a head. Mounting speculation that the rise in virus cases would necessitate the imposition of further restrictions added to the air of anxiety, knocking confidence among households and firms.
The pulse echoes similar surveys conducted across Europe highlighting the economic challenges countries face as they try to keep the pandemic in check.
Group chief economist for Bank of Ireland Loretta O’Sullivan said the survey results were disappointing but not surprising given the backdrop.
"Heightened Covid and Brexit uncertainty saw households and firms pare back their expectations for the economy, business activity and jobs and with Level 5 restrictions now imposed, the growth outlook for the fourth quarter of the year is challenging," she said.
Households took a more pessimistic view of prospects for the economy and jobs this month as public health-related restrictions were tightened and fears of a ‘no deal’ Brexit increased. A fifth of households considered it a good time to purchase big-ticket items, down from a quarter, whereas four in five considered it an appropriate time to save, up from 75%.
It has been a similar scenario across much of Europe as the continent remains in the grip of the second wave and increasing restrictions.
A measure of consumer confidence among people in Britain fell for the first time in six months in October, polling firm YouGov and the Centre for Economics and Business Research said. “The first fall in the Consumer Confidence Index in six months may prove to be a turning point in consumer sentiment as the reality of a second wave sets in,” Kay Neufeld, head of macroeconomics at the centre said.
German business morale fell for the first time in six months, weighed down by companies’ concerns about rising coronavirus infection rates that are making them more cautious about the coming months.
The Ifo institute said its business climate index fell to 92.7 from a downwardly revised 93.2 in September. “Companies are considerably more sceptical regarding developments over the coming months,” Ifo president Clemens Fuest said in a statement. “In view of rising infection numbers, German business is becoming increasingly worried.” The cooling of the sentiment in Europe’s largest economy coincides with a survey showing British consumer confidence also falling for the first time in six months.
Additional reporting Reuters