Global debt crisis fears 'wrecking consumer confidence'
Uncertainty in the global economy is "playing havoc" with spending here as consumer confidence continues to falter, a bank's survey has said.
The Northern Bank's research into consumer confidence in Northern Ireland reveals a measure of 94 for the third quarter of the year, down sharply from 108 in the second quarter.
Turmoil on global stock markets is reflected in the findings of the survey, which was carried out in early September.
More recently, the FTSE last week suffered its worst day since 2008 as panic over the global economy wiped around £64bn from the index's value. The IMF has also cut its growth forecast for the UK to 1.1%, down from 1.5% in June.
The bank's chief economist Angela McGowan said: "This recent tumble in household confidence was largely expected as the current economic climate is dominated by problems in Europe.
"It is no surprise that consumers are somewhat more downbeat about the future as policy-makers at the highest level have, so far, demonstrated an inability to adequately resolve the debt crisis."
Steepest declines were felt in the 'expectations for finances in the year ahead' and 'spending expectations'.
Just 9% of respondents thought that their finances would improve over the next year, while 41% said their finances would get worse.
The biggest decline was in expectations for finances over the next 12 months, with Ms McGowan saying that consumers felt there would be no "let-up" in economic uncertainty.
"A sustainable recovery is needed for job creation and an improvement in domestic demand but unfortunately the recovery in the UK and Europe has never been so vulnerable - consumers currently see no light at the end of the tunnel."
The survey said nearly half of respondents were planning to shell out less on major purchases, while just under 40% expected their spending to stay at the same level.
Such plans to keep purse-strings tightened was bad news for retailers, the economist said. "With domestic spending already at historically low levels, the latest survey unfortunately provides little by way of hope for local retailers.
"Policy makers should urgently be considering options for boosting the demand side of the UK economy as a prolonged collapse in consumption will ultimately render any deficit reduction plans ineffective."
The value wiped off the FTSE share index in last week's panic trading