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.

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“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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