Poll: now we’re ready to spend
Public to splash out on luxuries but still careful Younger generation leads new wave of spenders Only 51pc believe EU will help Ireland on Brexit
THE public has loosened its purse strings and intends to start spending again, according to a Sunday Independent/ Kantar Millward Brown opinion poll.
The poll finds that discretionary spending has increased significantly and is set to rise even further in the year ahead.
It also finds there has been a sharp drop in those who say they will have to tighten their belts over the next 12 months.
Discretionary spending is money spent on non-essential purchases, such as holidays or a luxury item.
It represents the amount of income remaining after a person pays for personal necessities and taxes.
In the year ahead, three-quarters of people say they intend to spend the same or more than they did two years ago.
The increased momentum in consumption is mostly driven by younger people living in the greater Dublin area, but is also evident in Munster, and is primarily among the better-off social groups.
This weekend’s poll supports findings published last week which revealed that the public’s confidence about their personal finances has soared to a level higher than throughout the Celtic Tiger period and is now at its highest point in 28 years.
However, this poll also tempers that finding somewhat in that it reveals a level of consumer caution underlying the new-found optimism.
Almost half (44pc) of those polled have held steady and have not increased discretionary spending in the past two years.
But a significant minority, almost a fifth (19pc), now spend more than they did two years ago on non-essential items.
However, the poll finds that in the year ahead people intend to spend the same and, in some cases, significantly increase spending across a range of consumer categories.
These include home improvements, to holidays in Ireland and abroad, to going to the pub, and on alcohol and eating in restaurants. In other findings, today’s poll also reveals that while Ireland’s relationship with the European Union remains strong, only half (51pc) of respondents believe the EU will respect the country’s “special position” with the UK in the Brexit negotiations.
A sizeable one-fifth (20pc) disagree that Ireland’s position will be respected by the EU, while, separately, a further three-quarters (73pc) believe the EU has more control over the country’s economy than the Government.
However, it is the findings in relation to discretionary consumer spending that will most encourage the retail sector at the cutting edge of what is often referred to as a ‘real economy’.
The news is not all encouraging though: the poll finds the public believes there is less value for money in the hospitality sector than there was in 2012.
It also finds that while service in the retail sector and in pubs/clubs has improved, it has fallen back notably in hotels and restaurants.
The poll finds 19pc of the public has increased spending on discretionary goods and services — up from 7pc in 2012.
A breakdown shows that 32pc of 18-24 year olds, 25pc of those aged 25-34 and 23pc of those aged 35-44 have increased spending, as well as 27pc of those in Dublin.
The poll also reveals that 28pc have decreased such spending — down massively from 62pc in the same twoyear period.
This poll also asked whether people thought they would spend more, less or about the same in 12 categories in the year ahead.
The results reveal an intention to increase spending across all categories.
However, discretionary cash will be mostly funnelled
into savings and investments as well as on home improvements, which again reflects a residual level of caution.
But there is still a significant increase in those who intend to spend more on entertaining at home, weekend breaks in Ireland, groceries, clothes, foreign holidays, going to restaurants, mobile telephone bills, impulse purchases, going to the pub and on alcohol (see page 5).
Similarly, there has been a notable increase in the number of people who say their spending habits will remain unchanged in the year ahead.
The poll also finds a corresponding overall sharp drop in those who intend to cut back or reduce spending. For example, four years ago 50pc said they would reduce spending on home improvements — now 16pc intend to reduce such spending; more than half (56pc) said they would reduce spending on weekend breaks — now 19pc say they will; 58pc said they would cut back on clothes shopping — now 19pc; 57pc said they would reduce spending in restaurants — now 21pc.
On Europe, 75pc agree that the EU has been good to Ireland since the country joined the EEC in 1973, falling back slightly to 71pc who agree, on balance, the EU has been good to this country in the past 10 years.
However, a similar 73pc believe the EU calls the shots on economic policy in Ireland, while just over half (51pc) believe the EU will respect Ireland’s position on Brexit.
Opinion is divided on what the future holds for Ireland in the EU: 28pc believe Ireland’s relationship with Europe will strengthen over the next five years while 23pc believe it will weaken and 36pc say it will remain the same.
Nearly one in four (23pc) feel the UK will benefit more from Brexit than the EU (15pc), with 25pc saying there will be no winners.
THE second part of our Sunday Independent/Kantar Millward Brown consumer-sentiment study, conducted late last month, sought to better understand the population’s behaviour in terms of spending habits; how have they changed over the past two years as the economy improved, and how they anticipate things changing over the next 12 months.
Financial sentiment from a more intangible point of view is buoyant, but it is intriguing to map this against how the public acts in terms of their spending behaviour. Optimism for the future is high, and they feel financially better off than they have been, but consumers are under no illusions — they are not being overly flaithulach with this newfound confidence.
When asked if they have increased their discretionary spending over the past two years, nearly one-in-five claim that they have — contrast this with a similar poll nearly five years ago, in the depths of the recession: just 7pc opted for the same. While the percentage of those stating that they have cut back has shrunk dramatically (62pc down to 28pc), what is most striking is that, despite our newfound optimism, nearly half (44pc) are holding steady.
It points to a picture of a nation seemingly buoyant, but cautious, all the same. We have been burnt before, and don’t want to go back to that place again.
Those who have loosened the purse strings over the past couple of years tend to be younger, and more likely to be living in the capital — reflecting a fault line in terms of the haves and have-nots.
This geographical reality runs parallel with all economic indicators — Dublin seems to be disproportionately benefiting from the resurgent economy, with the rest of the nation playing catch-up.
So what of the future? Where does the nation see itself over the next 12 months? Projected spending is on the up. Across all categories, the proportion of those stating they intend to spend more in the coming year has increased significantly.
However, again there are some interesting trends behind the headline statistics — there are many imbalances on what we think we are going to do, but also who is going to be splashing the cash. Reflecting a more prudential psyche, the largest attraction for those with discretionary spend is to funnel it into savings/investments. Nearly one-in-five (19pc) of the population believe they will do more of this over the next 12 months — up from just 7pc in 2012.
The next most important priority is for money to be invested in home improvements/ renovations (17pc). Both savings and renovations were heavy casualties during the recession, and it now seems as if the public is returning to these perceived safeholds.
Other categories that have seen notable growth in projected spend include us taking time out, be it for weekend breaks in Ireland (15pc vs 4pc previously) and foreign holidays (13pc vs 3pc before). Similarly, the percentage of those intending to eat out more in restaurants has seen an uplift (up 10 to 12pc).
What is striking about our future spending behaviour is who is driving it. Demographically, distinct patterns emerge. As you would expect, those higher up the socio-economic ladder (ABC1s) are much more likely to feel that the next 12 months will be a time of increased spending.
Reflecting a new paradigm, Generation Z (18-to-24-yearolds) are most upbeat in their spending habits — they are growing up at a time where recession, for many of them, is a footnote. They are consistently more likely to express positive spending intentions. Of course, from an economic point of view, they have less spending power, and their outgoings are more likely to be transient (pubs, clothes, restaurants, holidays). In addition, they do not have the baggage of more humdrum realities such as bills.
Dubliners are by far the most upbeat in terms of their spending power next year — they consistently over-index against other regions in nearly all categories. They are closely followed by those in their economic hinterland — those living in Leinster. Those living in Connacht/Ulster under-index on all categories of future spend. For many of them, the new-found fiscal uplift is no more than a mirage.
However, reflecting our cautiousness, the biggest increases across the board are among those stating that they will not change their spending patterns; we hope that we are not going to lose the run of ourselves this time out. This may reflect that, regardless of our perceived sense of financial well-being (for some, at least), we recognise that there are, potentially, some severe headwinds ahead.