DUBLIN (Reuters) - Irish consumer sentiment slumped in August to levels not seen in almost six years as British Prime Minister Boris Johnson’s determination to leave the European Union with or without a deal rattled consumers in the UK’s nearest neighbour.
Ireland’s economy is in good shape but government warnings about the potential for job losses and economic disruption that might follow a ‘hard Brexit’ are causing deep unease as the scale of possible problems comes into sharper focus.
The KBC Bank Ireland consumer sentiment index dropped to 77.2 in August from 85.5 in July, the second largest monthly fall since December 2012 and lowest reading since November 2013, when Ireland was reaching the end of an international bailout.
KBC Bank Ireland chief economist Austin Hughes said the decline in Irish sentiment over the summer are part of a sequence of Brexit-related blows to consumer confidence.
“The current weakening of sentiment is broadly comparable to the declines seen in 2016 around the UK referendum, again in summer 2018 when UK problems in terms of negotiating a smooth Brexit began to surface, again at the beginning of 2019 when Theresa May’s approach was floundering,” he said.
“And now, when both the increased threat and degree of damage that a ‘no-deal’ Brexit might mean for Ireland became forcefully evident.”
The financial crisis a decade ago has made Irish consumers sensitive to bad news after the painful experience of widespread job losses, tax rises, and spending cuts that followed the country’s three-year EU/IMF bailout.
Hughes said the August report showed that consumers are quite gloomy but a “cautious approach to household spending rather than cutbacks is likely to continue until Brexit is resolved.”
Reporting by Graham Fahy; Editing by Toby Chopra