Consumers in Dublin appear to have become more concerned about the economic outlook than those in the rest of the country, according to survey data from KBC Bank Ireland. A regional break-down of the bank's Consumer Sentiment Index shows an improvement in sentiment across the country during the first quarter. But the recovery in Dublin is far smaller than in other counties.
"The general trend is that sentiment is still okay - consumers aren't really worried about the end of the world -but there are important differences in the survey between the way consumers in Dublin and the rest of the country view their economic circumstances," said Austin Hughes, KBC Bank Ireland's chief economist.
We need your consent to load this rte-player contentWe use rte-player to manage extra content that can set cookies on your device and collect data about your activity. Please review their details and accept them to load the content.Manage Preferences
Part of the reason for that seems to be because of the more outward-facing focus of the Dublin economy, which makes its consumers feel more vulnerable to external threats and uncertainty. "Dublin consumers have become much more uncertain about the economic outlook - we think that's due to the greater focus on multinational activities in the global economy," he said. "It probably also has something to do with some softening in the rate of employment growth in Dublin, where as when you look at what's happening in the rest of the country there probably is more of a benefit from the turnaround of the public finances."
There may also be an element of other counties finally feeling the effects of economic growth - which until recently had largely been concentrated within the capital. "You could argue that this is suggesting that the recovery is broadening outside of Dublin, and Dublin is now just starting to see the glass as half empty where as the rest of the economy looking at it as maybe half-full," Mr Hughes said.
Brexit is probably the most blatant external threat facing the Irish economy at the moment, but there are also concerns about the impact US President Donald Trump's policies will have here in the coming years. One of the main focal points of that concern is around his tax reform plan - some detail of which has finally been released.
Mr Hughes said that if Trump gets his way on cutting corporation tax from 35% to 15%, this could well be bad news for Ireland. However there is still a lot of detail that needs to be filled in before the real impact becomes clear. "We're still so far from understanding the details, the timing, the various aspects of the plan that we can't say definitively," he said. "It's actually quite like the Brexit issue that's weighing on consumers; they know there's something nasty out there but they don't know exactly when, they don't know exactly how much of an impact it will have. We saw the announcement yesterday confirming there is a threat there but the nature, extent and timing of that threat is still uncertain and there are still quite a lot of hurdles. It's more a fear of a known unknown now in this regard, but it is adding to the uncertainty and the perception that there are significant downside risks to the economy," he added.
***
MORNING BRIEFS - Kingspan has reported sales of over €831m in the three months to the end of March, up 24% year on year. The insulation and building supply group - which holds its AGM today - said its business in Mainland Europe was continuing to show signs of recovery, while the US market was experiencing more encouraging conditions than was seen late last year. Kingspan said its UK business also remained slow, though it said trade was somewhat softer than it had been at the turn of the year - with its pipeline of projects trending weaker in recent weeks. The company also said tight supply would create a lag in them passing on rising input prices to customers - which would likely see sales growth outpace profits in the first half of the year.
*** AIB has said its performance for the first three months of the year was in line with expectations on the back of favourable economic conditions here. In a trading statement, AIB said it saw strong profitability, a stronger balance sheet, significant capital generation and further improvement in its risk profile during the three month period. The bank also said its impaired loans fell by another €0.5 billion since last December to stand at €8.6 billion by the end of March.
