DUBLIN (Reuters) - Irish consumer sentiment nosedived in December as fears over the future of the euro currency, yet another austerity budget and the prospect of years of squeezed personal finances reversed the autumn’s more positive outlook, a survey showed on Monday.
The fall in consumer sentiment in December takes the index back to where it was at the start of last year.
The KBC Bank Ireland/ESRI Consumer Sentiment Index fell to 49.2 in December from 60.1 in November, the largest monthly drop since August 2001. The big drop comes two months after a surge in sentiment to a 15-month high.
“It does seem fairly clear that consumers are very nervous at present and that they remain fairly gloomy about the outlook for the Irish economy and their own financial prospects,” said Austin Hughes, economist at KBC Bank Ireland.
“It will probably take at least another couple of months before consumers can decide whether the fears they signalled in the December sentiment survey prove to be exaggerated or become a painful reality.”
Hughes said the euro zone crisis had helped push Irish consumer sentiment up and down in the last quarter of 2011 with ECB rate cuts in the autumn boosting the mood.
The failure of European leaders to agree a comprehensive solution to the crisis in December punctured sentiment with frenzied discussion in the international media about the future of the single currency.
Ireland’s government also unveiled yet another austerity budget in December, and the prospect of many more years of cutbacks together with a weakening global outlook weighed on Irish people’s outlook.
Reporting by Carmel Crimmins