Irish consumer sentiment fell in July following the UK’s decision to leave the EU, but the scale of the drop was not as bad as may have been expected – according to a new survey.
The KBC Bank Ireland/ESRI consumer sentiment index fell to 99.6 in July from 103.4 in June.
The 3.8% drop was smaller than the monthly declines seen in either March or May and was ahead of expectations, particularly given the deterioration in a comparable UK measure.
Compared to typical movements in the past, the drop in Irish consumer sentiment in July was broadly similar to that seen in the closest US sentiment indicator.
Whereas it was somewhat larger than that seen in the euro area confidence measure and, quite limited relative to the dramatic fall seen in UK consumer confidence.
The KBC research suggests the recently improved momentum in domestic economic activity here is providing some offsetting support to consumer sentiment and spending.
Irish consumers sharply marked down their assessment of the general economic outlook in July but only slightly adjusted their assessment of their household finances and, perhaps surprisingly, they were more upbeat about their immediate spending plans-presumably in response to the onset of summer sales and holidays.
Commenting on the survey, Chief Economist with KBC Bank Ireland Austin Hughes said: “Brexit has less immediately threatening implications for the average Irish consumer than it does for firms exporting to the UK but the details of the survey point to a clear understanding that ‘Brexit’ is bad news for the Irish economy and, by extension, for Irish households.”
He added: “The July sentiment index still sits comfortably above its long term average.
“So, the overall survey result for July does not suggest any dramatic fall-out from the results of the UK referendum on EU membership.”
