Announcements made in yesterday’s Irish Budget could negatively impact the retail sector in the country, according to a group that represents the industry.
Responding to the decisions made by the Finance Minister Brian Lenihan, in what is being viewed as the toughest Budget in the nation’s history, Retail Ireland Director Torlach Denihan said homeowners’ capacity to make purchases will be reduced.
“The Budget will reduce householders’ spending power and probably retail sales,” he explained.
“The extent of the reduction in retail sales depends on how consumers react to both the Budget, to their own employment prospects and to the fact that Ireland now depends on external financial assistance.”
Judging by the angry scenes outside the Dáil during the Budget speech, which involved demonstrations from protesters unhappy at the government’s actions, consumer sentiment is low.
Higher taxes and lower welfare payments were among the measures announced as part of a government drive to save €6 billion in 2011.
Irish Business and Employers Confederation Director General Danny McCoy said: “The scale of the budgetary adjustment is required, but how it is achieved is just as important.
“More should have been done to reduce current expenditure, which remains too high given the major fall in tax revenue.
“The size of the public sector is out of line with the size of the economy and more action is needed to address this imbalance. Business is disappointed that there is little in the Budget to help job creation or to restore the competitiveness of the Irish economy.”
Not all the announcements made yesterday represent bad news for the Irish retail industry though, with some of the Finance Minister’s decisions protecting the sector by ensuring consumers spend their money locally.
Denihan commented: “It is very positive that excise on alcohol has not increased as this could have reignited cross-border shopping.”