Cantillon: Brexit and Dáil deadlock dampens mood

Politicians, take note. Consumers appear to be rather less relaxed than TDs about the post-election stalemate in the Dáil.

Urgency is distinctly absent from Leinster House yet a new survey finds consumer sentiment has dropped to its lowest level for six months.

That this comes on the heels of disappointing income tax and VAT returns in March merits reflection in the political world. Rapid economic growth is the balm of blathering TDs but pressures are evident in the domestic scene and in the world outside.

Proportion is necessary. Nobody suggests Ireland’s economic cogs are not turning.

Still, the latest consumer index from KBC Bank Ireland and the Economic and Social Research Institute recorded its biggest monthly decline since October 2014 in March and the three-month average fell for the first time since September.

This “significant change” of mood came as monthly income tax receipts dropped 10 per cent year-on-year.

The income tax dip remains a mystery, all the more so when the biggest declines were in PAYE and USC payments. In the same month, after all, the official unemployment rate dropped to an eight-year low of 8.6 per cent.

As for consumer sentiment, KBC economist Austin Hughes attributed the decline to concern about the global economic scene, the Brexit referendum in June and the prospect of prolonged political uncertainty on the home front. While this did not point to a marked change in the outlook for spending, Mr Hughes said the result suggested consumers were sensitive to the risk of more difficult times ahead.

“Many Irish consumers are poorly placed to handle any renewed economic weakness and, consequently, more focussed on such risks.”

To that we might add that an outgoing government with no real mandate is even more poorly-placed to handle such risks.

More than 40 days after polling day, the denizens of the Dáil are behaving still as it they have all the time in the world.

You’d think the sun always shines in the Irish economy.