Tags: Irish | Consumer | Morale | Steady | Political | Doubts | Linger

Irish Consumer Morale Steadies as Political Doubts Linger

Tuesday, 30 Nov 2010 10:47 AM

Irish consumer sentiment steadied in November, easing fears of a collapse, but economists warned that continued political uncertainty in the coming months could undermine the population's already fragile sense of security.

The surprisingly strong survey results, released just days after an 85 billion euro ($112) billion EU/IMF bailout of Ireland's finances and banks, came as Ireland's Justice Minister Dermot Ahern and another lawmaker from Prime Minister Brian Cowen's Fianna Fail party announced plans to stand down.

Those following the deepening euro zone crisis have turned their attention to Portugal following Sunday's rescue deal but uncertainty hangs over Ireland's ability to mend its finances given the fragility of Cowen's government and a likely early general election next year.

The KBC Ireland / ESRI Consumer Sentiment Index inched up to 48.4 this month from 48.1 in October. That is well below the series high of 130.9 set in January 2000 and below a year-ago figure of 53.6, but comfortably above an all-time low of 39.6 set in July 2008.

KBC Chief Economist Austin Hughes described the results as surprisingly robust but said it was too early to draw conclusions about longer-term trends.

"In the light of the EU/IMF intervention that followed the survey period and the political uncertainty that still persists, it could be some months before Irish consumers are completely sure about their fate," he wrote in a report accompanying Tuesday's survey.

A general election became unavoidable last week when Cowen's junior coalition partners, the Greens, said they would withdraw from government once the 2011 budget was passed. The budget itself hangs in the balance, with two independent lawmakers potentially in a position to determine its fate.

JOBS BOOST

Ahern, a former foreign minister, said he had informed Cowen he planned to retire in October having been diagnosed with rheumatoid arthritis and denied his decision was a response to plans by Gerry Adams, leader of the nationalist Sinn Fein party, to run for parliament in his constituency.

"In the interests of my family and myself and my health ... obviously my pace of life has to change somewhat," Ahern told national broadcaster RTE. "I believe that there will be a significant ABA vote in County Louth — Anyone-But-Adams — given the reaction that I have got to his coming into the ring."

The departure of one of the government's most experienced ministers is another blow for Cowen who opinion polls show is the least popular prime minister in modern Irish history and whose Fianna Fail party, long the dominant force in Irish politics, is expected to lose next year's vote.

Rory O'Hanlon, another Fianna Fail lawmaker who has sat in the Irish parliament since 1977, also said on Tuesday that he would not contest the next general election.

With massive government spending cuts looming, Ireland is increasingly counting on exports by multinationals with operations in Ireland, such as chipmaker Intel, to inject some life into the economy.

Foreign companies with European headquarters in Ireland such as Google will also be relied on to take up some of the slack in the jobs market.

Technology outsourcing and consulting firm Accenture said on Tuesday it planned to open a research and development analytics centre in Dublin, creating 100 jobs over the next four years on top of the 1,300 people it already employs in Ireland.

In a further sign of economic weakness, credit data on Tuesday showed loans to households fell 4.9 percent in October from a year ago, with lending for house purchases 1.6 percent lower.

"There is very little good news in these latest banking figures," said Allan McQuaid, chief economist at stockbroker Bloxham. "Until the banking sector crisis is fully resolved and things improve on the labor market front then the supply/demand for credit will remain subdued in our view."

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Irish consumer sentiment steadied in November, easing fears of a collapse, but economists warned that continued political uncertainty in the coming months could undermine the population's already fragile sense of security. The surprisingly strong survey results, released...
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