Consumer confidence rose sharply in the North during the first quarter of the year once details of the British government’s approach to Brexit and the possibility of a solution to the Border issue emerged, according to new research.
Danske Bank’s latest Northern Ireland Consumer Confidence Index, published on Tuesday, shows that during the first three months of this year confidence in the North hit its highest levels since the third quarter of 2015.
Danske Bank’s economist Conor Lambe, said the upbeat consumer sentiment is at odds with the fact that inflation is rising and causing some real pressures on household spending power.
“This strong bounce back could, in part, be due to consumers now having more clarity about the UK government’s planned approach to the Brexit negotiations, and that the UK and EU have both shown willingness to find a solution to the Border issue, Mr Lambe said.
‘Economic growth’
“The rise in confidence could also be interpreted as a sign that, while economic growth is expected to slow, consumers now feel confident that the short-term impact of the EU referendum on the economy is not going to be as severe as first thought.”
The index increased from 132 in 2016 Q4 to 141 in 2017 Q1 and was four points higher when compared with the first quarter of 2016.
Although prices are rising in the North, consumers told Danske they are still planning to spend over the next 12 months and are particularly confident about their spending plans for high value items such as holidays and furniture.
This has led the bank to assume that consumer spending will be higher this year than last – although Danske still maintains consumer spending growth will slow throughout the year and into next year.
This year for the first time because of the depreciation of sterling since the referendum, Danske also asked Northern Ireland consumers where they intended to spend their main holiday in 2017.
A total of 35 per cent said they plan to travel outside of Britain or Ireland but a further 35 per cent also said they would not be going on holiday this year.
Mr Lambe said the research suggests the relative weakness of the pound could be having an impact on consumers’ holiday plans as about 59 per cent of consumers are either not planning on going on holiday, hope to holiday domestically or don’t know where they will go.
