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RTÉ News
23-05-2025
- Business
- RTÉ News
15% of households couldn't cope with a financial emergency
How would your household deal with an unexpected financial emergency costing €1000? That was a question posed as part of this month's Credit Union Consumer Sentiment survey. Just over a third of consumers say that they would use savings, while 18% say they would use their income, and 15% say they would be unable to cope with an unexpected expense or bill. Asking about people's capacity to weather a financial emergency has been part of the survey for the past five years, and is based on a similar question asked in the regular "Report on the Economic Well-Being of US households" conducted each year by the US Federal Reserve. The findings show the share of Irish consumers resorting to savings has been trending down in the past two years from the 2023 peak of 44%. Economist Austin Hughes says the slightly reduced reliance on savings in the 2025 survey could reflect the fact that some consumers have drawn down Covid-era savings or required them for other purposes such as a deposit for a house purchase. "It may also be that, in a more uncertain environment, that some consumers are trying to build a higher level of precautionary or long-term savings," he said. "As the overall level of household deposits has continued to increase, these results might also be consistent with a greater concentration of savings in wealthier households of late." As might be expected, there was a strong positive correlation between income and capacity to use savings in a financial emergency in the 2025 survey. Over 65's were the age group most likely to draw on savings, followed by those aged 25 to 34, perhaps reflecting less family-related financial commitments in these demographics. Those aged under 25 tended not to say they would use savings. The results also show a small increase in those who say they would use their income to handle a financial emergency to just under one in five consumers or 18%. "There has been a modest trend increase in reliance on incomes through the past six years that may reflect benefits from a resilient economy and an easing in cost-of-living strains for some consumers. Some element of this uptick could also reflect a switch necessitated by depleted or spoken-for savings," Mr Hughes said. The age group most likely to draw on their incomes in a financial emergency were the under 25's, followed by the over 65's - "a result that may speak of widely differing income circumstances within these age groups". A significant 15% of Irish consumers say they would be unable to cope with a financial emergency costing €1000 in 2025. The economist said while this is lower than the peak 17% share reported in 2023, it still represents a higher share than the 7% of consumers who said they would be unable to handle a financial emergency costing €1000 in the 2021 survey. "In that respect, it suggests continuing strains on household finances in Ireland from the recent cost-of-living crisis," he said. "It may be worth trying to reconcile the incidence of this response in the 2025 survey with a clear improvement in overall 'macro' conditions in the Irish economy through the past year," he said. "While aggregate household income increased in 'real' or inflation-adjusted terms, the number of households is likely to have increased faster, meaning that, on average, household spending power has declined," the economist stated. Mr Hughes said, while inflation has eased over the past year, it has started to pick up again in recent months, and far more importantly, consumer prices have not retraced any of the sharp increases of recent years. "In these circumstances, it is not entirely surprising that significant numbers of Irish consumers say they would struggle to cope with a financial emergency at present," he said. Those on higher incomes are less likely to say they could not handle a financial emergency in the 2025 survey as are those who say they are currently making ends meet with ease. This response was altogether more common among females than males. It was also most common among those aged between 45 and 64, while those aged 65 and over were the demographic least likely to give this response, which Mr Hughes said it perhaps suggests a heavy burden of 'fixed' household costs among the middle-aged leaving many with little capacity to cope with the unexpected. While there are relatively small numbers of consumers in most other categories of responses, the survey suggests a somewhat greater incidence of reliance on financial lenders other than on banks and credit unions, or on credit cards. "This response was more prevalent among those on low incomes and those facing difficulties making ends meet. This might hint at the worrisome sight of a small but not insignificant group of consumers who are both cash and credit-constrained. The very small number who would resort to selling something would also fall under this heading." Overall, the 2025 'financial emergency' survey would seem to emphasise an important if often overlooked consideration in relation to the circumstances of the Irish consumer at present, Mr Hughes said. "Financial circumstances continue to vary markedly across Irish households. While that may not appear surprising, it counters the widely adopted economic assumption of the 'representative agent' which implies that a rising 'macro' tide must inevitably lift all boats. In that regard, it sheds light on why, in a 'Great' Irish economy, consumer sentiment suggests so many consumers may be 'grumpy'," he stated. "From a policy perspective, these survey findings run counter to the widely heard argument that lower inflation and rising aggregate incomes mean that further fiscal supports are no longer required," he said. "Beyond the immediate strains highlighted in the survey, the evidence at home, and, in many instances, more dangerously abroad, is that economic and social fracture is damaging and destabilising. Those framing Budget '26 need to be conscious that trade threats are not the only challenge the Irish economy faces at present," he concluded.
Irish Independent
23-05-2025
- Business
- Irish Independent
Revealed: the number of people who wouldn't cope if they got a sudden bill for €1,000
The findings in a recent survey have prompted a leading economist to support calls for another cost-of-living package in this year's budget. Researchers asked people if they could cope financially if they were faced with an emergency costing €1,000. One in seven (14pc) consumers say they would be unable to cope with such a financial emergency, a special question asked as part of the Credit Union Consumer Sentiment Survey for May shows. Independent economist Austin Hughes, who analyses the survey, said the results suggest a continuing strain on household finances from the cost-of-living crisis. He said household spending power has declined and the findings support calls for another cost-of-living package in this year's budget. 'From a policy perspective, these survey findings run counter to the widely heard argument that lower inflation and rising aggregate incomes mean further fiscal supports are no longer required,' he said. The Government has ruled out an across-the-board package to support households in October's budget, but hinted at measures targeted at the most vulnerable. Central Statistics Office figures show grocery prices are up an estimated 36pc in the last four years. 'While inflation has eased over the past year, it has started to pick up again in recent months and, far more importantly, consumer prices have not retraced any of the sharp increases of recent years,' Mr Hughes said. 'In these circumstances, it is not entirely surprising that significant numbers of Irish consumers say they would struggle to cope with a financial emergency at present.' The Credit Union survey, in partnership with Core Research, shows financial circumstances and conditions continue to vary markedly across Irish households. Responses show a third of consumers would be able to call on savings to deal with an unexpected financial emergency. One in five would resort to using their income to fund the outlay. ADVERTISEMENT Mr Hughes said survey findings indicate just over half of Irish consumers could be regarded as financially 'comfortable' at present. About one-in-four consumers might be seen as 'clinging on'' financially. He said around one in five could be described as 'coping' in the current circumstances. However, this share who are coping has declined as consumer circumstances diverge. 'The trend in recent years is for a small increase in the numbers clinging on. There is a slight increase in the comfortable, and a drop in the number of those who are coping,' Mr Hughes said. He said this raised a question about whether middle-income people have been squeezed too much. The economist said the evidence at home and abroad is that economic and social fracture is damaging and destabilising.
Irish Examiner
22-05-2025
- Business
- Irish Examiner
Consumer sentiment rises after tariff pause but remains low compared to long-term trends
Irish consumer confidence picked up marginally this month as the threat of tariffs receded but the overall outlook remains 'gloomy' with confidence levels 'well below' long-term trends, the latest Consumer Sentiment Index shows. This month's consumer sentiment index reading stood at 60.8 - up from 58.7 during April but significantly lower than the 74.9 figure seen as recently as January. The May survey reading is also some distance below the long-term survey average of 84.0. The Credit Union Irish Consumer Sentiment Survey is based on a sample of 1,000 adults and is conducted by Core Research on behalf of the Irish League of Credit Unions. The analysis of the survey was written by economist Austin Hughes. Mr Hughes said the increase between April and May 'is not altogether surprising' but the 'latest survey reading still suggests Irish consumers remain gloomy, with confidence remaining well below the level of a year ago and its long-term trend'. He said the improvement in Irish consumer sentiment during May was driven by a 'limited easing in concerns about the outlook of the economy and jobs' which more than offset a 'slight weakening' in consumers' assessments of their own personal finances. The survey shows the weakest elements of consumer confidence related to household finances likely reflecting a pick-up in grocery bills of late. While the outlook for household finances over the next 12 months was effectively unchanged, Mr Hughes said this should be seen in the context of that being the weakest element of the April survey reading. 'Our sense is that renewed consumer concerns around their household finances owe much to a continuing step-up in grocery price inflation that has translated into ongoing and somewhat unexpected financial strains for significant numbers of consumers,' he said. 'The tone of the May sentiment survey suggests consumers are slightly less nervous about an apocalyptic collapse of the Irish economy than they were a month ago but there is still a strong sense that economic and financial conditions will be very challenging.' The strongest improvement in consumer sentiment between April and May was seen in the outlook for jobs. 'This likely reflects a partial correction of the thinking that prompted a sharp weakening in sentiment in April,' Mr Hughes said. 'Comfortable' v 'clinging on' In the survey, consumers were also asked how their household would deal with an unexpected financial emergency costing €1,000. It showed 15% saying they couldn't deal with an unexpected financial outlay while 37% said they would rely on savings. Another 18% said they would use their current incomes to handle such a problem. 'Drawing together those who can meet an unexpected financial emergency through savings or from their current incomes, the 2025 survey might suggest that a little over half of Irish consumers might be described as 'comfortable' at present,' Mr Hughes said. 'At the other end of the financial spectrum, roughly one in four Irish consumers might be considered to be 'clinging on'. This grouping includes those who say they could not handle a financial emergency at present as well as those who would resort to borrowing from a lender other than a bank or credit union and those who would sell something,' he said.
Irish Independent
06-05-2025
- Business
- Irish Independent
Donald Trump's tariff threats send Irish consumer sentiment crashing to two-year low
The collapse in confidence is largely caused by fears about the impact of US president Donald Trump's trade policies rather than current financial strains, the Credit Union Consumer Sentiment Index for April indicates. Large numbers of people are struggling financially as items such as groceries continue to soar in price. The survey conducted to produce the index shows consumers are not seeing any dramatic change in their current circumstances. But there is a strong sense that more difficult times lie ahead, the findings suggest. Economist Austin Hughes, who oversees the compiling of the index, said uncertainty reigns. 'Exactly how far or how fast Irish economic conditions might weaken in the future remains unclear and subject to rapid and random changes on policy pronouncements from the White House and elsewhere,' he said, adding that this makes it difficult for Irish consumers to assess how much to adjust their behaviour. 'A state of flux, as well as fear, is likely to dominate consumer sentiment and spending in coming months.' The confidence of consumers is also being impacted by ongoing price rises, with food inflation a particular concern. The Credit Union Consumer Sentiment Survey, in partnership with Core Research, has an index reading of 58.7 for April. This is far lower than the 67.5 figure for March. It is the second successive month of a substantial decline in Irish consumer confidence. ADVERTISEMENT 'The April sentiment number reading is the lowest in just over two years, since the March 2023 figure of 53.8,' Mr Hughes said. 'The April sentiment reading of 58.7 is now also materially weaker than the 29-year survey average of 84.1, and also some distance below the 66.6 average of the past five years.' Despite the weakening sentiment for consumers, a special question asked as part of the sentiment survey found most Irish consumers plan to spend on home improvements in the next two years. About 43pc plan spending money on what is described as 'significant refurbishments', and another 26pc will spend money refreshing their homes. Those aged under the age of 45 are far more likely to plan significant home-improvement spending in the coming years than those aged over 55.
Irish Examiner
05-05-2025
- Business
- Irish Examiner
Irish consumer sentiment drops to two-year low on trade war uncertainty
Irish consumer sentiment has fallen to its lowest level in two years on the back of a global trade war set off by US president Donald Trump. The findings of the April Credit Union Consumer Sentiment Survey now show that the gap between current conditions and expectations for the future is the largest since the threat of a 'no-deal' Brexit in late 2020. The drop in consumer confidence here is comparable to but slightly larger than marked sentiment declines elsewhere. US consumer sentiment has dropped to its second-lowest monthly reading since 1953. The monthly survey found that most households have confidence in their personal finances for the year ahead their outlook for the wider economy is much gloomier. Exactly how far or how fast Irish economic conditions might weaken in the future remains unclear and subject to rapid and random changes on policy pronouncements from the White House and elsewhere. It makes it difficult for Irish consumers to assess how much to adjust their behaviour. A state of flux as well as fear is likely to dominate consumer sentiment and spending in the coming months. The survey, in partnership with Core Research, shows an index reading of 58.7 in April, significantly lower than the 67.5 figure for March, and marking a second successive month of substantial decline in Irish consumer confidence. The April reading is materially weaker than the 29-year survey average of 84.1 and also some distance below the 66.6 average of the past five years. Economist Austin Hughes said the survey suggests that any pullback in Irish household spending in the months ahead seems likely to be driven by fears about the future rather than current financial problems. "The nature of the very real risks facing the Irish economy from a global trade war at present are very different in terms of the speed and type of fallout to those seen in the 2008 crash," he said. "The survey was taken between April 5th and 15th, during which time there were an almost bewildering number of pronouncements, qualifications, postponements and rumours on trade measures and their possible economic repercussions." However, Mr Hughes said the element of the survey that saw the smallest drop in April was in relation to spending plans. "This element could have been boosted by a falling trend in ECB interest rates and may also have gotten some temporary support from Easter-related outlays." Home improvements The survey asked consumers about specific plans for spending on home improvements. Just under half of Irish consumers (47%) say they have undertaken significant home improvements in the past two years, up markedly from just over one in three consumers (37%) who gave this answer in the 2024 survey. "Our judgement is that a comparatively high incidence of home improvement spend among the 55 to 64 age group may owe something to 'empty nesters' and/or 're-nesters' being financially able and wishing to 'rightspec' their properties for changed household circumstances involving either fewer or more occupants," Mr Hughes said. Read More Irish consumers make permanent switch to own-brand labels
