Bank of Ireland has released it latest Economic Pulse survey which is conducted by Ipsos MRBI on behalf of Bank of Ireland with 1,000 households and approximately 2,000 businesses on a range of topics including the economy, their financial situation, spending plans, house price expectations and business activity.
The Pulse came in at 56.6 in October 2020. The index, which combines the results of the Consumer and Business Pulses, was down 8.6 on last month and 20.5 lower than a year ago. October marked a new low for consumer sentiment while businesses downgraded their near-term expectations for activity and jobs.
Bank of Ireland say the twin threats of the pandemic and Brexit were to the fore this month, with the entire country moving to Level 3 of the ‘Plan for Living with COVID-19’ when the survey was conducted and tensions between the UK and EU over future trading arrangements coming to a head. Mounting speculation that the rise in virus cases would necessitate the imposition of further restrictions added to the air of anxiety, knocking confidence among households and firms.
While Budget 2021 included additional supports for firms, COVID-19 and Brexit-related uncertainty weighed on the mood. All four sectoral Pulses posted weaker readings this month, with the Services Pulse seeing the biggest drop amid further restrictions on social interactions and the hospitality sector (businesses in the latter were extremely downbeat about prospects for activity in the next three months).
The October survey also looked at growth ambitions over the medium term. The results show that 56% of firms are planning on expanding in the next one to three years, a bit below the pre-pandemic (January) figure of three in five; while 11% intend to scale down (up from around 8%).
Households took a more pessimistic view of prospects for the economy and jobs this month as public health-related restrictions were tightened and fears of a ‘no deal’ Brexit increased. Reflecting the uncertain environment, buying sentiment was also a touch softer than in September while savings sentiment was a little firmer – a fifth of households considered it a good time to purchase big ticket items (down from a quarter), whereas four in five considered it an appropriate time to save (up from 75%).
Commenting on October’s Economic Pulse, Group Chief Economist for Bank of Ireland, Dr Loretta O’Sullivan said, "The Economic Pulse dropped sharply in October, with both consumer and business confidence well down on the month. This is disappointing but not surprising given the backdrop to this month’s survey. Heightened COVID and Brexit uncertainty saw households and firms pare back their expectations for the economy, business activity and jobs and with Level 5 restrictions now imposed, the growth outlook for the fourth quarter of the year is challenging."