Small bounce in consumer sentiment after Budget – Credit Union Consumer Sentiment Index
There was a “small bounce” in consumer sentiment in October, but little sense that consumers think Budget 2025 will dramatically improve the outlook for their household finances.
That is according to the latest Credit Union Consumer Sentiment Index.
The survey, conducted in partnership with Core Research, shows an index reading of 74.1 for October, marking a modest improvement from the September figure of 71.9.
It showed a marginal improvement in expectations for the next 12 months and a moderate increase in spending plans.
The response to the measures introduced in Budget 2025 were muted, however, with 47% saying they do not think they will lead to an improvement in their living standards.
A further 42% expect the Budget will lead to a slight improvement, while just 4% of those surveyed expect the Budget to bring about a significant improvement in their living standards.
The reports author, economist Austin Hughes, said: “At first glance, this might seem to suggest that most Irish consumers significantly underestimate the impact of Budget measures on their financial circumstances. However, several explanations can be advanced for these survey findings.”
He said the tax and welfare changes announced in the Budget “are broadly comparable in scale to the impact of indexation-which in principle means they act to broadly maintain rather than boost or reduce living standards”.
He said a substantial element of Budget measures, roughly €2bn out of €4.7bn, took the form of temporary cost-of-living measures that – because they won’t form part of ‘permanent income’ – may not be seen as impacting on living standards.
Some consumers may be focused on the enduring loss in their spending power because of the cumulative increase in living costs in recent years, Mr Hughes said: “As a result, any helpful impact of Budget ’25 measures may be judged to be only providing a partial offset to losses rather than an improvement in living standards.”
Those who indicated that the Budget would not improve their living standards were more likely to be consumers based outside Dublin than in the capital, perhaps reflecting a greater incidence of lower incomes and higher fuel bills.
Female consumers were also more likely to say Budget measures would not improve their circumstances than males, again possibly because of income differences.
In the same vein, those reporting difficulties making ends meet were much more likely to say the Budget would not improve their financial position than those saying they can make ends meet with ease.
Older consumers were more likely to say Budget measures will not improve their living standards than their younger counterparts, with a steadily increasing share of negative responses across age groups that peaked in the 55-64 year age group and fell markedly among over 65s.
“The ‘peak negativity’ in later middle age may reflect substantial pre-committed financial outgoings among such households as well as concerns about pension adequacy,” Mr Hughes said.
The September consumer sentiment survey contained a supplementary question that found that improving health and housing infrastructure were the key issues that Irish consumers wanted to see addressed in the Budget.
“Those responses might hint that access to suitable healthcare or housing are seen as key drivers of many consumers assessments of their living standards at present,” Mr Hughes said. “Where this is the case, Budget ’25 measures are unlikely to have markedly altered consumers sense of their current circumstances.”
Analysis of the report suggests that in circumstances where the overall boost to spending power is modest in the aggregate, financial health or otherwise varies widely across the spectrum of Irish households
Specific circumstances of particular consumers may be such that Budget measures do not fully offset ongoing pressures on their personal finances.
David Malone, CEO of the Irish League of Credit Unions, said: ”The small uptick in Irish consumer confidence in October is encouraging in that it appears to reflect a solid Irish economy and some small easing in cost-of-living pressures.
“As we head towards the turn of the year, the survey serves to emphasise both the opportunities and challenges that Irish consumers now face, circumstances that they can face more confidently with the support of their local credit union.”
