No wall of money to be thrown at Christmas economy: KBC Bank Ireland chief economist
Irish consumer confidence slid in November as a surge in Covid cases raise fears that people will cutback their Christmas shopping splurge.
The confidence of Irish consumers slid in November as Covid cases surged, suggesting there will be no huge spending splurge for shops this Christmas, a major survey reveals.
The latest KBC Bank Ireland results show that consumer confidence fell in recent weeks even before speculation that the spike in Covid cases could lead to further health restrictions, its author, chief economist Austin Hughes said.
Mr Hughes said it appears a significant slice of the billions in excess savings built up by some households during the pandemic may already be spoken for and will not be significantly released during this festive period.
Last Christmas there was something of a spending spree after "a vicious" first year of Covid, he said, but the survey suggests a large number of households face financial hardship that will somewhat dampen spending plans in the coming weeks.
"There is a sense there is no wall of money to be thrown at the Christmas economy," Mr Hughes said.
People saving for a deposit to secure a home mortgage or by paying down debt will likely have put aside some of their savings, while people working in hospitality face further uncertainty about their jobs, Mr Hughes said.
He said figures last week that showed a large rise in retail sales in Britain suggest shoppers there were bringing forward Christmas spending on toys and other festive goods to beat potential supply shortages, rather than them planning for a spree.
"We also think the emerging fourth wave in Covid cases was an important factor weighing on the mood of Irish consumers of late as speculation about the re-imposition of health-related restrictions became more widespread during the November survey period," the survey found.
The survey also tracked nervousness about the rise in household bills this winter.
On Monday, gas prices in Europe fell to €85.35 per megawatt hour. However, global crude prices rose slightly to $79.26 a barrel.
Meanwhile, Germany’s latest surge in Covid-19 infections is worse than anything the country has experienced so far, Chancellor Angela Merkel said, calling for tighter restrictions.
Austria, which went into its fourth national lockdown on Monday, is threatening fines for people who refuse a shot once mandatory inoculations kick in next year.
In Britain, Boris Johnson’s government said Christmas family gatherings will be able to go ahead as normal and there is no evidence to suggest extra virus restrictions will be needed. “The plan is looking solid,” Education Secretary Nadhim Zahawi, who was previously the government’s coronavirus vaccines chief, told LBC radio.
Asked if people could host big Christmas dinners and have their families around, Mr Zahawi said: “Yeah, indeed.” The UK government is banking on a vaccine boosters and light-touch social restrictions to keep a lid on the pandemic, even as other parts of Europe impose fresh lockdown measures.
- Additional reporting Bloomberg
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