Belfast Telegraph

Austerity blamed for dip in consumer confidence, report

By Margaret Canning

Fears over austerity contributed to a wobble in confidence in Northern Ireland during the second quarter of the year, according to the latest Danske Bank research today.

The consumer confidence index said their measure dropped eight points between April and June - bringing it back to levels experienced last year.

And while the economy is expanding - with growth of around 1.6% in the first quarter, according to the Northern Ireland composite economic index - Northern Irish people are still not fully confident in their finances.

Confidence levels were down across all regions in Northern Ireland - but even with a steep fall of 16 points, Belfast city was still the most confident region.

The lowest levels of confidence were recorded in the north region, which includes Carrickfergus, Antrim, Ballymena, Larne and Ballymoney.

Danske Bank chief economist Angela McGowan said: "Although the economy in Northern Ireland is still expanding it is possible that local confidence levels have been impacted by a number of national and local events.

"The outcome of the UK election and its ramifications for further austerity over the next five years could be reflected in this recent survey.

"In addition, the £600m black hole in Northern Ireland's budget combined with fines from Treasury and the negative consequences of these for local public services may be starting to impact on local confidence levels."

Ms McGowan also said only time would tell if the fall in confidence was a lasting trend.

"It remains to be seen if this is a one-off blip in the index because of the UK election or the beginning of a downward trend for the region because of local public spending constraints.

"With clear signs of growth in the local economy there is a fair chance that the index will pick up again.

"Indeed, we have recently seen confidence levels in the UK falling just after the general election only to bounce back to a 15-year high the following month."

The biggest jitters were felt in households' expectations for finances, with a fall in the percentage of people who were expecting their finances to improve.

There was also a downturn in household spending expectations, while there was a rise in the numbers of people who were expecting their finances to get worse. Young people were chirpiest about their future finances while pensioners were the least optimistic.

Only 14% of people questioned said they expected to be shelling out on 'big-ticket' items such as cars and white goods.

Ms McGowan said that could spell unease for retailers. "Unfortunately, when confidence falls, spending is one of the first things to feel the impact.

"It will therefore be disappointing for local retailers if footfall starts to wane - particularly when inflation is low and real wages are finally starting to rise."

UK GDP growth of 0.7% during the second quarter of the year has increased expectations of an increase in interest rates from 0.5% - another factor which may weigh on household finances.

Belfast Telegraph