Irish consumer confidence dropped to a nine month low in March, according to the Credit Union Consumer Sentiment Survey.
Fear of the impact on the Irish economy of a tariff war between the US and the EU was a key driver of the drop rather than increased financial pressures.
A sense that the Irish economy could be particularly exposed to threatened tariffs on trade prompted the largest monthly pullback in Irish consumer sentiment in two and a half years in March.
”It is not surprising that the March sentiment survey paints a picture of a much more nervous Irish consumer as they face into the uncertain impact a threatened trade war could have on the economy and their own personal financial circumstances,” David Malone, CEO of the Irish League of Credit Unions said.
The March sentiment reading suggests Irish consumers are “scared and scarred” as the threatened tariff war prompts a downgrade to the outlook for economy and household finances.
Authors of the report note that consumers have not yet recovered from the financial crash, the Covid pandemic and the cost of living crisis, and are now entering a period of economic uncertainty and looming threats to the Irish economy.
Assessing the survey period in March, economist Austin Hughes told RTÉ’s Morning Ireland that Irish consumers, like their counterparts in many other countries, are worried about the impact of a trade war and the economy as a whole and on their household finances.
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“We heard constant doom and gloom around what might befall the Irish economy in the event of a trade war, the particular fallout for the pharma sector, for jobs and for the public finances so it’s not at all surprising that consumers are more worried,” said Mr Hughes.
“It is the the biggest monthly fall in two and a half years, back in September 2022 we saw a slightly larger fall because of the looming incidence of much higher energy bills, and if you go back to April 2020 the monthly fall was nearly five times as great when the Irish economy shut down,” he said.
“It’s fears rather than a current deterioration in the financial circumstances that are driving the change in sentiment, but it’s not at all surprising,” he added.
In addition to the fallout for household finances from weaker employment and a tighter fiscal position as a result of a more threatening economic outlook, a series of high-profile price increase announcements during the survey period added to gloom by suggesting continuing pressures on household finances for many consumers.
The survey highlighted that the Irish consumer confidence fall is bigger than elsewhere in Europe but smaller than US where inflation fears are rattling American consumers.
American consumers were even more nervous that increased tariffs would push the cost-of-living sharply higher for them, prompting an even larger monthly fall in US consumer sentiment than seen in the Irish survey and bringing US consumer sentiment to its weakest level since November 2022.
