Household survey - Pockets are becoming close to bare

CSO findings of widespread cuts in household spending as a result of the economic crisis should come as no surprise.

But in a week in which the Government expressed hopes of creating 100,000 jobs, they serve as a reminder of the balance that must be struck between austerity and growth.

If consumers aren’t spending, businesses aren’t selling and all the employment creation supports in the world won’t make up for a marketplace that has no customers.

Of course, the jobs strategy focuses on businesses with export potential — an acknowledgement that we have to look outside of this country for customers.

However, the small firms that employ the vast majority of Irish workers rely on local pockets and those pockets are becoming increasingly bare.

You don’t start cutting back on groceries, as more than half of households have done, if you have luxuries on your list that can be sacrificed first.

The CSO survey, a pilot for what will become a more comprehensive ‘household financial distress’ survey later this year — a revealing title in itself — also found that 45% of households had used up some or all of their savings in the last two years.

That puts paid to the notion that there is some vast untapped pool of money just waiting to be poured onto the parched retail wasteland if only consumer confidence could be restored.

Some people do have savings but many of them no longer have job security, have lost their pensions or have family out of work who need help.

In fact, the CSO survey found that one in 10 households had recently borrowed from family or friends to pay for basic goods or services.

So what the savers have, they’ll probably hold for as long as they can. Their rainy day deposit accounts do not make up for the general lack of day to day spending money that keeps local businesses afloat.

Just as worrying is the finding that one in five households have delayed or missed paying bills and one in 10 have delayed or missed loan repayments simply so they could afford basic goods and services.

Ireland is struggling with national debt and that struggle will be all the more prolonged if personal debt continues to mount.

It is likely the scale of household cuts — measured last spring — will have escalated by the time the more detailed study takes place late this summer.

Unfortunately, the CSO says it won’t have those results before early 2013, which will be too late to influence the budget in December.

But it shouldn’t take statistics. The boarded-up shops and empty offices in every town in the country provide evidence enough that domestic demand has taken a brutal hammering.

The Government needs to think very carefully about eating any further into incomes through whatever further combination of cuts and charges may be coming down the line.

Widespread household financial distress is not a promising foundation on which to build a jobs strategy.