DUBLIN: Irish consumer sentiment hit a nine-year high in June as falling unemployment and the promise of more tax cuts when the government presents in budget later this year helped boost optimism, a survey showed.
Ireland’s economy grew faster than any other in the European Union in 2014 and economic indicators have been strong so far this year, with retail sales up sharply..
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The KBC Bank Ireland/ESRI Consumer Sentiment Index climbed to 102.8 from 98.5 in May. The index of current economic conditions at 113.9 remains far higher than the index of consumer expectations at 95.4, but both are at their highest levels this year.
KBC chief economist Austin Hughes said the survey should not be interpreted as signalling “unbound optimism.”
The survey suggests a broadly shared sense among consumers that the Irish economy is doing well and the outlook for jobs has improved but pressure on personal finances is still widespread,” Hughes said.
Ireland’s ruling coalition has pinned its hopes of re-election early next year on voters starting to feel the benefits of the recovery and has pledged to cut taxes and increase spending for a second successive year in 2016.
Hughes said the prospect of a more generous budget in October appeared to be the primary driver of the jump in confidence and the government had a “delicate task” in balancing the aim of maintaining momentum and cutting the budget deficit.
Under EU rules, Ireland has to deliver a balanced budget by 2018 compared to a forecast deficit of 2.7 percent of gross domestic product this year.
