By Frank Conway
Consumer confidence in Ireland remains weak because many people are not seeing the benefits of an improving economy in their net take-home pay.
And this is not just an Irish problem. It is a problem that impacts millions of workers across the EU. As economies ‘improve’, families are not seeing those improvements reflected in their take-home pay or benefits.
But here in Ireland, the statistical recovery in the economy is not translating to a real recovery in wallets and bank balances and so, families remain wary of spending.
In fact, the problem goes far deeper. For example, families know that when push comes to shove, their livelihoods are on the line every single day. Many, who endured long periods of unemployment or the threat of unemployment are never going to raise their heads and ask for higher wages or better benefits. But this does not mean they are happy with the system, they are just trapped in the system and choose to prepare for worst-case scenarios in the meantime.
Across the socio-economic spectrum, families are nursing their financial situations back to health; this takes time. For example:
Mortgage arrears – Over 76,000 residential mortgage holders continue to be in arrears with over 50,000 90 days passed due. Many are working to get their mortgages back on track.
Rainy-day funds – best practice in any economy, many families are simply saving their cash. Having a rainy day fund is one of the 4 pillars of building and protecting family wealth and during the economic depression, families all over Ireland lost that capacity to save; many are making up for lost ground.
Rising costs – for many people, rising rent costs, the rising cost of insurance and the rising cost of getting and education means empty bank balances at the end of the month.
A Tip O’Neill moment. Tip O’Neill, the larger-than-life US politician one quipped that all politics is local. Regardless of any grant visions politicians may have held, what really mattered was how well the electorate fared individually. The same is true in Ireland today. Regardless of the statistical recovery of the Irish economy, consumers are not buying that recovery is strong enough or real enough to encourage them to open up their wallets and start spending any time soon.