No end to recession until consumers start spending again

Retail Ireland, the group that represents the Irish retail sector, this week published the results of a survey of member companies and called for measures to improve consumer confidence and domestic demand in the forthcoming Budget.

Commenting on the current outlook, Retail Ireland Chairman and Topaz Director Frank Gleeson said: "The results of our latest survey of sentiment in the retail sector are poor. This is mirrored on the consumer side in the weak VAT returns published last week and the poor retail sales data the week before. There will be no end to the current recession until consumers feel sufficiently confident to begin spending again.

“Many consumers are simply too nervous to spend even though they have the spending power and are in comparatively well paid jobs. Government needs to embark on a comprehensive and pro-active communications strategy to put the facts on the economy in perspective for consumers. They have done an excellent job in this regard in communicating to the international financial markets, to our EU partners and to the EU/IMF/ECB. This success needs to be replicated at the level of the domestic consumer. The expertise of the retail sector in communicating to the consumer is available to Government to help with this.

“To help the domestic economy recover we recommend the Budget contain the following:

• A new social welfare smart card system to ensure that payments and benefits spending are promoted in the domestic economy;

• Stamp duty and property tax incentives for first time buyers to get the property market moving again;

• Incentives for home improvements through a home improvements tax credit;

• Reform of pension rules to allow people to draw down up to 25% of the value of AVCs without penalty and at the standard rate of tax.

"Next year consideration should be given to moving the Budget to earlier in the year and away from the vital pre Christmas trading period” concluded Mr Gleeson.

Key survey findings:

Business Outlook: Some 46% of respondents rate the prospects for their business over the three months September-November as poor, some 54% rate it as average and none rate it as good for this period.

Confidence: Just 15% of respondents are more confident about their business than they were three months ago, 31% are less confident and 54% of respondents report similar levels of confidence.

Current Business Performance: Some 54% of respondents rate the current performance of their own business as poor, 39% rate it as average and 8% rate it as good.

Current Overall Business Environment: Some 77% of respondents rate the overall current business environment as poor or very poor, 23% rate it as average and none rate it as good.

Note: The findings are based on responses received from 84 retailers polled over the autumn.

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