Consumer incomes in Ireland are set to stabilise over the course of 2012 following two years of significant declines, according to figures released today.
IBEC, a group that represents businesses in the Republic of Ireland, found in its Irish Consumer Monitor that mortgaged households will be €700 (£562) better off per annum, thanks to recent interest rate cuts from the European Central Bank and a further possible 0.5 per cent cut in the coming months.
This news will be welcomed by the debt-hit country and the IBEC has launched a campaign aimed at restoring domestic demand and boosting spending during this economically unpredictable time.
Following the analysis of consumer spending relating to consumer trends, IBEC Chief Economist Fergal O’Brien said: “The main cause of the unemployment crisis is the lack of consumer confidence and weak domestic demand.
“Getting people back to work is the priority, but to do this we need a return to more normal, sustainable consumer spending levels.
“There are some positive signs domestically, but eurozone worries continue to unnerve consumers.”
While mortgaged working households will see spending power rise by 2.4 per cent over the rest of the year, economic fragility remains a concern as other groups are set to see a spending decline of 0.8 per cent to 3.7 per cent over the period.
As such, the IBEC has put forward a number of proposals to kick-start the Irish economy and calls on the Government to implement changes.
Tax incentives should be implemented to encourage the public to take part in home renovation, moving work from the informal to the formal economy according to the group, while updates to the social welfare system and a reform on pension rules have also been suggested to improve domestic funds.
“The Government’s approach to reviving activity in the domestic economic needs to be tailored to reflect the different types of consumer and their different circumstances,” O’Brien explained.
“New thinking and greater ambition is needed. There are practical steps the Government can take to support activity in the domestic economy, even in the face of constrained public finances.”