Survey suggests ‘two-speed recovery is here to stay’

A confidence gap between Dublin-based consumers and those living elsewhere in the country became evident in the first quarter of the year, a new survey shows, suggesting the concept of a ‘two-speed recovery’ may remain a feature of the economy for some time.

The consumer sentiment comparison study — measuring optimism levels of those within and outside of Dublin — from KBC Bank Ireland and the ESRI economic think-tank shows that while confidence among consumers in the rest of Ireland hasn’t changed in the past two quarters, those living in the capital reached a 13-year confidence high during the first three months of 2016.

KBC chief economist Austin Hughes said the readings suggest a “greater resilience” to mounting concerns over domestic and global economic risks among those living in Dublin compared to the rest of the country.

“Consumers in the rest of Ireland may feel that the recovery outside the capital is not as well-established and any setback to economic conditions may be more damaging to their circumstances in what is still an unevenly felt upturn,” he said.

“Consumers in Dublin and elsewhere were a little less optimistic about the outlook for the Irish economy in the year ahead than they were three months ago, likely reflecting both global and local concerns.

"This downgrade was more pronounced outside the capital and this meant those consumers also downgraded their outlook for jobs while Dubliners were more confident about employment prospects in early 2016.”

Mr Hughes did, however, emphasise that the current readings, while uneven, still suggest a broad trend of consumer sentiment, nationwide, remaining positive.

“Views on household finances are becoming modestly more positive overall, both in the capital and elsewhere,” he said.

Regarding jobs, 58% of Dublin consumers expect unemployment to fall further in the next year with 14% anticipating a rise in joblessness. Outside of Dublin, those percentages are 42% and 25%, respectively.

“While the broad picture remains positive, a greater element of caution of late on the part of consumers outside the capital hints that a two-speed recovery may remain a feature of Irish economic conditions in coming months,” said Mr Hughes.


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