The economic boom doesn’t disguise fears of downturn


The economic boom doesn’t disguise fears of downturn

Voters remain optimistic about their prospects but clouds lurk on the horizon, writes Paul Moran

'As a nation, we appreciate how the economy is going, but we are beginning to have some reservations. We are becoming a little bit more cautious in our outlook towards the future.' Stock photo: Depositphotos
‘As a nation, we appreciate how the economy is going, but we are beginning to have some reservations. We are becoming a little bit more cautious in our outlook towards the future.’ Stock photo: Depositphotos

It IS rather apt that today marks the zenith of a fantastic season of the showcase that is hurling. When it ends, we will all feel a little bit deflated as we look into the impending autumnal months, not with trepidation, but rather with a sense of looking back to what we have seen.

It is, in some respects, parallel to what we have found in our latest findings in the Sunday Independent/Kantar Millward Brown consumer sentiment opinion poll.

As a nation, we appreciate how the economy is going, but we are beginning to have some reservations. We are becoming a little bit more cautious in our outlook towards the future. This poll also illuminates the stark regional divide between the Haves and the Have Nots.

First off, the headline figures. More than one in three of us (36pc) feel that we are better off than we were a year ago, compared to one in five feeling more negatively. No change there compared to the last comparable poll in April 2017. Similarly, 35pc of us feel we will be better off this time next year. Again, no real change. Of course, context is key. When we last asked this question, there was an exuberance within the psyche of the nation. Now it has stalled, albeit still at impressively positive heights.

However, there is an undercurrent of cautiousness beneath the waves ­­- there seems to be a nagging sense of doubt around.

There are notable demographic rifts on this small island. Dubliners and younger people are notably more optimistic about the next 12 months – metropolitans are hugely more cheerful about their financial heartiness in the year ahead (over half, 52pc, feel they will be better off), with those under the age of 45 also buoyant in their outlook. Bear in mind however, that this poll seeks to understand a feeling of financial well-being, but not quantify the value of it.

Of course, one only has to look around the capital where every available footprint of land now seems to have a crane towering over it to understand this enthusiasm.

Those in Leinster are also relatively positive (three in 10 feel the future is bright). Once you step outside the Pale, the feeling, while positive, is more muted. This regional imbalance will vex rural legislators, but more importantly, their constituents.

In terms of where do we think we are going, two in three of us feel the country is going in the right direction (significantly up from 52pc to 66pc), versus just one in five feeling we are on the wrong track (compared to 29pc last year). Again, it is Dubliners and those from the professional classes (ABs) who are most expectant.

In judging the mood of the nation, from a selection of five positive and five negative words, we are generally upbeat – 26pc feel they are happy, and 23pc feel optimistic. The net effect is that three in four of us express positive sentiments.

So why the doubts? It is instructive to note that the proportion of those who think the economy will improve over the next 12 months is down significantly, from 38pc to 30pc. It could be argued that this is a simply pragmatic vista, and that things can’t continue to rise forever.

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As such, we are not being overly flaithiulach. We feel that we are receiving worse value for money in some sectors of the economy, notably the hospitality industry (hotels and restaurants), although service levels are holding up. In light of the ongoing debate over VAT rates in this sector, it is a timely reminder to all sides of the debate.

We are becoming more prudent in our discretionary spending – just one in seven (14pc) say they are spending more on smaller treats, compared to 19pc 18 months ago. Instead, we are tending to hold the line; more than half (52pc) remain unchanged in their behaviour (up eight points from 44pc).

The most pertinent indicator of our financial wariness is when we ask about the future spending intentions. Across the board, the public is retrenching in terms of their future spending habits. Most are intending not to change their outgoings over the next 12 months, be it on bigger ticket expenditures such as household renovations, foreign and domestic holidays, or more fleeting/impulse buys such as restaurants, confectionery, pubs etc. Similarly, the proportion of those not intending (or able) to invest more in savings or investments has increased sharply.

It paints a picture of a nation that recognises these are relatively good times, but also is paying heed to the more negative mood music – mortgage rates being among the highest in the EU (at a time of record low levels from the ECB), rents at all-time highs, homelessness and a faltering public service (health service in particular). When economically things turn sour, which they invariably will at some stage, we seem to have learned from some mistakes from the past; we are unwillingly to push the boat out too far.

It seems as if we are trudging along, neither happy nor unhappy with our lot, but rather just getting on with it.

We appreciate the status quo and the relative state of our financial platform, but are unwilling or fearful to over-indulge.

It may well also be the case that the continuing chattering about the rude health of the nation’s economic well-being is an alien place to many; between increased taxation and minimal pay rises for some, there is a disconnect.

From a political point of view, this will have implications.

If the electorate has doubts in the middle of a “boom”, there is much to ponder in terms of electoral strategy if things start going south. Between Brexit, Trump and other external shocks, this should weigh heavily on the minds of all.

As Fine Gael learnt at the last election, the economy is not necessarily a saviour – any campaign could be fought on different terms; back to the ground hurling, as it were.

Paul Moran is an Associate Director with Kantar Millward Brown

Sunday Independent

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