Consumer confidence in Northern Ireland dropped further at the tail end of the year – with the then ongoing political stasis in part to blame.
Around 40% of those surveyed said absence of devolved government was the largest drag on confidence levels, while Brexit was another factor that adversely impacted how people were feeling.
That’s according to the latest Danske Bank Northern Ireland Consumer Confidence Index for the fourth quarter of 2019.
Looking ahead, there’s a mixed picture for consumers. Almost a quarter of people expect their finances to worsen over the next year, compared with 18% who expected their financial position to improve.
Meanwhile, 11% of people expected to become more secure in their job, while 12% expect their job security to worsen. “Consumers had been pointing to the lack of an Executive as one of the biggest drags on their confidence levels since we introduced this question to our survey in the third quarter of 2017, so the return of the devolved institutions at the start of this year is undoubtedly a welcome development,” Conor Lambe, Danske Bank chief economist said.
“Despite the UK now having left the EU, I believe that Brexit will continue to dampen the confidence of local people throughout this year. There is still a high degree of uncertainty around how the UK and EU will trade with each other once the transition period comes to an end, and how the Northern Ireland protocol within the Brexit Withdrawal Agreement will be applied in practice. If progress in the negotiations around these areas can’t be evidenced relatively quickly, then nervousness related to Brexit could begin to build and confidence levels could soften further.
“It is somewhat surprising to see such a large proportion of people continuing to point to the impact of higher prices as the factor having the biggest negative impact on how they were feeling, particularly given the relatively strong rate of wage growth. The latest figures show that inflation in the UK was running at just 1.3% at the end of 2019, considerably below the 2.1% observed at the end of 2018 and the 3% at the end of 2017. But despite the lower headline inflation rate, prices are still increasing and local people are signalling that those rises are negatively impacting how they view their financial position.”
He said the labour market here remains “one bright spot from a local economic perspective”. “The employment rate in Northern Ireland is currently the highest on record and the unemployment rate is the joint lowest on record.”
However, while Northern Ireland’s unemployment rate remains lower than the rest of the UK and the Republic of Ireland, overall economic inactivity remains significantly higher, and wages and output lower.