Irish Confidence Stays Near 17-Month Low as Consumers Brace For 2011 Cuts
Irish consumer confidence stayed close to its lowest level in 17 months this month as the country was forced to seek financial aid and the nation braced itself for higher taxes and spending cuts.
The consumer sentiment index rose to 48.4 from 48.1 in October, KBC Ireland and the Economic & Social Research Institute in Dublin said in an e-mailed statement today. The October reading was the lowest since May 2009.
Finance Minister Brian Lenihan will detail a plan next week to save 6 billion euros ($7.8 billion) in 2011, part of an effort to narrow the biggest fiscal deficit in the euro area. The cost of bailing out the country’s lenders, including Anglo Irish Bank Corp., forced the state to agree on Nov. 28 an 85 billion-euro international aid package.
“Even if Irish consumers remain very gloomy, confidence is not completely in freefall,” Austin Hughes, chief economist at KBC Ireland, said in the statement. While “the prospects for household finances is likely to be very difficult, it may not be quite as awful as had been feared.”
KBC’s gauge of how consumers viewed their current situation slipped to 76.6 in November from 76.7 the previous month. A measure of households’ expectations rose to 29.4 from 28.8.
Lenihan will lay out the 2011 budget on Dec. 7, the first step in a four-year plan to narrow the deficit to the European Union limit of 3 percent of gross domestic product in 2014 from about 12 percent this year. Irish 10-year bonds fell today, widening the yield spread against German bunds, Europe’s benchmark, by 15 basis points to a record 664 basis points.
“The December and January results should tell us whether this month represents a possible turning point or is merely a statistical aberration,” said Hughes.
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