Brexit continues to weigh on consumer sentiment, according to Bank of Ireland's latest Economic Pulse. The mood among households and firms was gloomier in August and the Economic Pulse hit a new low.
Households remain on edge about the economy, with around one in two now expecting things to get worse over the coming year. It comes after Boris Johnson took up office as UK Prime Minister and raised the stakes on the Brexit front, and the Central Bank of Ireland published estimates of the damage a no deal departure would potentially do to the Irish economy in the short term.
The Bank of Ireland Economic Pulse stood at 79.1 in August 2019. The index, which combines the results of the Consumer and Business Pulses, was down 3.7 on last month and 12.2 lower than a year ago.
Dr Loretta O'Sullivan, Group Chief Economist for Bank of Ireland said sentiment could remain ropey for a while yet given the unsettled Brexit backdrop. "At the time of last month's survey, Boris Johnson hadn’t been confirmed as UK Prime Minister but that expectation was enough to knock sentiment. When this month’s survey was conducted, he was in situ and upping the ante with his 'Do or Die’ approach to Brexit.
"As the recent Central Bank and our own Bank of Ireland analyses show, if the UK leaves the EU without a deal at the end of October, the Irish economy could suffer badly. So households and firms are understandably worried and unsurprisingly consumer and business confidence took another hit in August."
The Business Pulse stood at 79.9 in August 2019, down 3.3 on last month and its weakest print to date.
While the Industry Pulse was little changed, the Retail and Construction Pulses took a tumble this month and the Services Pulse eased back as firms downgraded their near-term expectations for business activity and hiring.
Fears of a no deal Brexit come October have risen tempering the general mood, with the lack of clarity around domestic policy measures like 'Help to Buy' also weighing on building sentiment.
More positively, the August survey points to some easing in non-labour input cost pressures over the past three months for firms in the industry, services and construction sectors as the weak pound feeds through to lower import prices.