Bank of Ireland has today released its latest Economic Pulse 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.
With the Government announcing that Level 5 restrictions would remain in place till early March and implementation difficulties in respect of the new trading arrangements with the UK, households and firms were downbeat about the here and now this month. Respondents sounded a more positive note on the outlook for the economy and commerce however, helped by the deployment of COVID-19 vaccines with more due to arrive.
Forty six percent now think the economy will get better over the coming year (35% in January) and two in five expect unemployment to fall (three in ten last month). The results show that deposit/savings accounts continue to dominate but that interest in financial assets like shares and in property has increased a little.
Two in five indicated that they consider it a good time to invest in such things (typically it’s a third), with a search for returns in the current low interest rate environment likely part of the explanation.
Irish firms were downbeat about the recent trading period as the extension of Level 5 restrictions at home, and fresh measures across the Euro area, added to post-Brexit disruption (businesses in the industry and services sectors reported a further deterioration in export order books in February). But with some re-opening of the economy expected in the coming months as virus cases come down and inoculations go up, they were more upbeat about the outlook for business activity and hiring.
Households in Dublin, the Rest of Leinster, Munster and Connacht/Ulster all upped their expectations for future house price increases – taking the national series to its highest level since the summer of 2019.
Commenting on February’s Economic Pulse, Group Chief Economist for Bank of Ireland, Dr Loretta O’Sullivan said, "The Economic Pulse rose in February as vaccine-related optimism offset lockdown fatigue and post-Brexit headaches. Both consumer and business sentiment were up on the month as households and firms looked towards the economic recovery now that the vaccine roll-out is underway. Of course, it will be a while before we get back to ‘normality’ and it may be that some of the pandemic-induced changes to the way we live, work and shop persist, with longer lasting implications for the economy."
She added, "More e-commerce and increased remote working will require further investment in telecommunications infrastructure for example. Indeed, 36% of the firms surveyed this month identified telecommunications as the priority area for investment in their region, which is double the pre-COVID figure."