Consumers, especially those under 50, feel now is a better time to save money than any other time over the past five years. The latest Savings Index, compiled by building society Nationwide UK (Ireland) and the ESRI, shows that just over 49% of consumers identify as regular savers.
This is the highest level since January 2010 when the index began. The overall savings sentiment figure is also at its highest level since then.
Nationwide UK (Ireland)'s chief executive Brendan Synnott says that consumers' confidence in their own finances has lifted due to the general upturn in the economy here. Mr Synnott says the lesson that consumers learned during the period from 2008 to 2012 was that when confidence is dented it evaporates very quickly. But he says that what is evident now is the "firm base" in the economy and a lot of optimism about the strong economic indicators. He also says the fact that more people are working is a major boost to consumer confidence, adding that such a dramatic increase in the number of people working over the last number of years is translating to all areas of the economic recovery.
The Government wants to get a better spend-save balance, but Mr Synnott says that we are probably some way away from that level yet. While there is a certain reliance on next week's Budget to boost people's spending power, he says the precautionary motive for saving has been very strong in Ireland and people were severely hurt by the downturn. Part of rebuilding people's confidence is getting yourself into a situation where you can afford even to contemplate spending further and saving is the basic building block of that, he adds.
Mr Synnott says that after the Central Bank's changes to the mortgage market, there is an element of people now saving to buy. "The reality is that people have to develop a discipline now to be in a position to buy a home. This is one of the most important building blocks of the savings market," he states. He also says that people are getting out of negative equity on their mortgages for the first time in a long while. This is a very important development as it gives these people a choice again in what way to direct their future, he adds.
The Nationwide boss also says the low interest rates available for deposits is very disappointing for a person who has developed a habit of saving. He says it is very difficult to see a greater rate of return for savers in the immediate future given that rates in the euro zone are so low. There needs to be a lead from the UK and the US before the ECB can even contemplate higher rates, he adds. On DIRT, Mr Synnott says that if you look at the issue from the Government's perspective the rational to increase interest on savings was to discourage savings and get money into the real economy through spending. But he says that unfortunately the precautionary motive that Irish people have had has seen them saving more rather than less in recent years. He also predicts there will be no change to DIRT in next week's Budget.
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MORNING BRIEFS - Economists are struggling to keep up with the economy or, at least, their forecasts are. Merrion is the latest to revise upwards its prediction for growth in GDP or overall economic output. In its quarterly outlook published this morning it forecasts 6% growth, up from a prediction of 4.2% in July.
*** Ryanair says Google needs greater transparency in its online ads to ensure consumers are not misled. The airline has taken issue with how ads for cheap flights are displayed on its search pages. Ryanair says websites known as screen-scrapers are consistently ranked above Ryanair's own site in searches. Screen scrapers trawl airline websites for cheap fares and then sell them on to passengers through their own site. Ryanair says in some cases consumers buying through screen scraping sites are unable to check in online and do not receive up-to-date flight information as the airline does not have their contact details.
*** Irish pension managed funds suffered losses across the board to finish the third quarter as global stock markets fell chiefly on concerns about China. Figures from Rubicon investment consulting show an average loss of 2.6% during September and a loss of 6.3% for the quarter as a whole. The best performer during the three month period was Setanta Asset Management with a 5.1% loss. Average returns for the year-to-date, however are still in positive territory. The average pension managed fund is up 7.2% since January.
