Retailers will be happy to know that consumer recovery is well underway, according to Ibec’s Consumer Monitor 2014. The group that represents Irish business said that rising employment, strong consumer sentiment and recovering retail sales now indicate a solid recovery in the domestic economy.
Ibec Head of Policy and Chief Economist Fergal O'Brien said that now is the time to secure the recovery, and that the government must take steps in the budget to ease pressure on households. He said, “Positive economic trends mean income tax can now be reduced. This money will go back into the economy and ultimately support growth and job creation. There is scope for €300 million worth of income tax reductions, a €100 million reduction in consumer taxes and the abolition of the pension levy. Reducing tax could lead to a 4% rise in disposable income next year."
The report showed that many factors have encored the recovery, such as the rise in employment, of 65,000 more in two years causing a positive effect on household’s disposable income as well as the increase in savings and consumption. Additionally, the cost of living has remained fairly stable, with prices rising by only 0.2% in the first half of 2014 after inflation of only 0.5% in 2013.
Meanwhile, household wealth is recovering as households reduce their liabilities and housing assets benefit from rising house prices. Population growth will also support the consumer economy and underpin Ireland's long-term economic growth potential of 3% to 4% per annum.
O'Brien said that Ireland is regaining its attractiveness as a place to live and work. “In the last three years the number of immigrants climbed to nearly 56,000 people, and 30% are Irish people returning as the economy recovers. Dublin has been the biggest winner from the labour market turnaround, with employment up 30,000 in the capital since the first half of 2012.” O’Brien said that the Government now need to introduce policies that encourage greater numbers of recent emigrants to come home. “This should involve tax cuts, further institutional reform and increased investment in infrastructure and education.”
© 2014 - Checkout Magazine by Genna Patterson
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