Consumers saved for ‘unexpected events’ over Christmas

Impact of Brexit believed to have contributed to more prudent holiday period

The under-50s age group was more likely to feel negatively about their ability to save in December

The under-50s age group was more likely to feel negatively about their ability to save in December

 

Irish consumers continued to save for unexpected events last month despite the pressures of the Christmas period, new figures show.

The Nationwide UK (Ireland) Savings Index, which measures overall consumer sentiment towards savings, fell in December as the pressure of Christmas spending and ongoing uncertainty over the impact of Brexit impacted saving habits.

The index fell to 112 points in December, from 126 in November.

However, despite the pressures of Christmas, the level of consumers who said they were continuing to save for unexpected events – known as precautionary saving – held steady at 33.3 per cent.

The fall in overall sentiment was led by a drop in the Savings Attitude Index, which asks people how they feel about their ability to save. It dropped to 110 points in December, from 133 points the month before.

The under-50s age group was more likely to feel negatively about their ability to save in December.

The Savings Environment Index, which asks consumers if they feel it is a good time to save and whether Government policy encourages saving, fell to 115 points from 199 points the prior month.

The drop in sentiment was led by a fall in the number of those who felt it was a good time to save.

Perceptions of current government policy towards saving remained relatively static, falling by less than 2 points in December from the previous month.

Nationwide UK (Ireland) managing director Brendan Synnott said consumers were concerned about the possible effects of Britain’s EU exit on the economy.

“It isn’t surprising that the savings index would fall in December, given the pressures on people at the time of year to spend money,” he said.

“However, what is noticeable is the fact that the level of precautionary saving held up, even given the pressures during Christmas and the positive domestic economic data, which continued into the last quarter of the year.

“This is a reflection of ongoing consumer wariness over the impact of the UK referendum and what it might mean for the domestic economy in Ireland. Coupled with that are broader changes in world politics, which may have been unsettling for some.”

When asked what their intentions are for surplus money, 54.9 per cent of those aged under-50 said they would use it to pay down debt, an increase of 10.3 per cent from November.

Among the over-50s age group, 39.5 per cent said they would use it to pay down debt. Just 8.8 per cent of savers overall said they would spend surplus money, with 9.5 per cent saying they would invest it.