Consumers spending again as Covid-19 lockdown lifts

Consumers have begun to save less and spend more as lockdown measures introduced to curb the spread of the Covid-19 pandemic continue to ease, according to data from Bank of Ireland.

The bank’s Savings and Investment Index, which was published on Monday, demonstrates the changing attitudes of Irish consumers as the economy begins to re-open.

Compared to the period of full blown lockdown when savings increased significantly, less people are now saving by default.

The bank said there is now more opportunity to spend and less surplus income from measures such as Covid-19 payment schemes and mortgage breaks, which is leading to a return to more normalised patterns of expenditure.

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When it comes to investing, consumers are continuing to invest but their attitude to investing is back to pre-Covid levels.

“Interestingly this resetting of attitudes has occurred during a very profitable period for investors, with global equity markets now effectively back to January 1st levels,” the bank said.

“At the same time, consumer confidence has fallen back lately and the survey results illustrate a heightened concern about the impact of a second wave of Covid-19 on the health and well-being of people’s families.”

The overall index, which gauges attitudes to savings and investing, decreased in the third quarter by 4 per cent on the previous quarter, falling from 100 to 96.

There was a drop in both savings and investment sentiment, with the savings index falling to 101 in the quarter from 106 in the previous quarter, while the investment index fell from 94 to 90.

Kevin Quinn, chief investment strategist at Bank of Ireland investment markets, said survey data has reverted back towards pre-Covid levels.

“Attitudes to savings have weakened as might be expected as consumers began to spend again and the effect of income supports begins to fade,” he said.

“Equally we’ve seen attitudes to investing weaken somewhat despite some very impressive gains in particular in equity markets over the past three months, with many hitting new highs.

“The main explanation for this rests in the most significant concern being voiced by respondents - worries about the impact of a second wave of Covid-19.”

There was also a significant increase in the bank’s retirement optimism Index which rose 12 per cent in the second quarter. That has now reversed with an 8 per cent drop back to levels seen pre Covid-19.

There was a drop in the number of people who felt they would be comfortable in retirement from 45 per cent in the second quarter to 36 per cent in the third, but only a modest disimprovement in the numbers who feel retirement will be difficult, up to 26 per cent from 23 per cent.