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Irish Household Spending Could Fall By 20% In 2020, Research Shows

By Donna Ahern
Irish Household Spending Could Fall By 20% In 2020, Research Shows

If a strict lockdown has to be reintroduced for a 12 week period from October due to a 'second wave' of infections, Irish household spending in 2020 could fall by 20%, according to a new study published today by the Economic and Social Research Institute (ESRI).

The research draws on real-time spending data in Ireland and international evidence to simulate the effects of the COVID-19 pandemic on consumption in Ireland in 2020 and indirect tax revenues, considering three scenarios: a 'new normal' with ongoing physical distancing; a 'second wave' of infections in late 2020 and a vaccine which allows normal economic activity to resume in the final quarter of the year.

Other Possible Scenarios 

The research suggests that in the most benign of these scenarios, where a vaccine becomes available, the research suggests household spending will fall by nearly 12%.

This would result in a proportionally larger fall in indirect tax revenues of 18.7% as those areas of spending that are most affected such as motor fuel are taxed at higher rates than those that are less affected such as groceries, the report showed.


“The findings of this study point to major reductions in household expenditure this year given the necessary restrictions to suppress the spread of COVID-19," said Conor O’Toole, an author of the report and a senior research officer at the ESRI.

"A new normal with ongoing physical distancing would lead to a 13% fall in spending while a second wave may see spending cut by one fifth,” he added.

© 2020 Checkout – your source for the latest Irish retail news. Article by Donna Ahern. Click sign-up to subscribe to Checkout.

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