Slowing Economy Doesn’t Make Much Cents

Recent figures have shown a slowing in a variety of aspects in the economy and consumer confidence has taken a hit. But no one has been able to pinpoint the origin of the decline as Ireland’s economy slides

The latest banking figures suggest the rate of credit card borrowing slowed by 9% on last years increase and the recent credit turmoil in the US is thought to be partly responsible for more hesitant borrowing practices. But the slowing housing and job market is also thought to be causing an impact.

The IIB/ERSI’s consumer sentiment index has set the present rate of consumer confidence at 63.5 compared to 84.9 on the same month last year.

Chief Economist for the IIB, Austin Hughes, blames a sharp worsening in job market prospects for the decline.

He said: “It is not surprising that Irish consumer sentiment weakened in February. Increased worries about the global economy and turmoil in financial markets weighed on confidence right around the globe. As a result, US consumer sentiment dropped to its weakest level in 16 years while French consumer confidence also fell.”

Mr Hughes said there was a “barrage” of bad news on the job front and a large number of high profile layoff announcements such as GlaxoSmithKline announcing 100 losses this week, raising fears about job security.

However, activity in the household mortgage market is now at it’s lowest since the start of 2003, while the annual rate of increase was at its lowest in 14 years.

January also saw a continued decline in lending to the real estate and construction sectors as the private sector shares in the nervousness of the public.

Analysts are now searching for a way to reignite the economy and pull it out of its present slump.

(DW)