Consumers are preparing for a less lavish Christmas, bank surveys show

Amid jobs and housing scares, consumers are hunkering down for a less lavish Christmas while businesses eye a happier New Year.

Bank of Ireland’s November Economic Pulse survey found 32 per cent of businesses plan to increase investment over the next year.

Just three in five consumers plan to spend the same or more on gifts this year, up from three in four in 2021 as job losses and the cost of living weigh on households.

A majority of the 1,000 consumers surveyed by Bank of Ireland (56%) expect unemployment to rise over the next year, while 53% predict house prices will rise.

The macroeconomic pulse read 67.2 in November, 6.7 points higher than October but 16 points lower than a year ago.

Business pulse rose 8.8 points to 73 (down 12.3 points year-on-year), while consumer pulse fell 1.5 points to 44.3 (over 30 points below its 2021 level).

“Recent survey results have been mixed,” said Dr. Loretta O’Sullivan, Group Chief Economist at the Bank of Ireland.

“While the Irish economy has benefited this year from the lifting of pandemic-related restrictions and strong job growth, the war in Ukraine has had a knock-on effect on inflation. It has also led to a global slowdown.

“This is a headwind for export sectors, including ICT, and news of layoffs at some high-profile tech companies may have unsettled households this month.”

However, she predicted an optimistic 2023.

“With government support helping households mitigate increased energy and other bills, our new forecasts suggest GDP will still grow 4 percent next year,” she said.

Service companies, builders and retailers were more upbeat than October, although industry was more cautious.

Two-thirds of retailers expect their sales to be the same or higher than last year – lower than the 85 percent who said the same thing before the pandemic.

A survey by the Irish Hotel Federation (IHF) found 94 per cent of hoteliers are concerned about the economic outlook as energy costs rise to 12 per cent of total revenue, triple pre-pandemic levels.

For an average hotel with 70 rooms, this means an increase in annual energy costs of €380,000. Food prices are up 25 percent this year, beverage costs are up 16 percent, bed linen and laundry services are 30 percent higher, and insurance costs are 18 percent higher, the IHF estimates.

Appointment bookings for 2023 have declined significantly in key international markets, particularly the UK, compared to 2019, the association said. Hotel room occupancy was just 71 percent from January to October, compared to 80 percent before the pandemic.

She is appealing to the government to postpone the increase in VAT from 9 percent to 13.5 percent planned for March 2023.

“The last thing government should do is increase inflationary pressures at a time when companies are grappling with rising business and energy costs and falling demand in many key international markets,” said IHF President Denyse Campbell.

Meanwhile, the government has announced that “thousands more” Irish firms will be lining up for export subsidies from their local corporate offices.

Direct funding is now open to manufacturing and internationally traded companies employing more than 10 people.

https://www.independent.ie/business/irish/consumers-bracing-for-less-lavish-christmas-bank-survey-shows-42177790.html Consumers are preparing for a less lavish Christmas, bank surveys show

Fry Electronics Team

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