Hospitality worst hit as consumer spending fell by €10bn, CSO data shows

A sizeable decrease in consumer spending last year overwhelmingly hit restaurants and hotels, according to new data released on Monday.

Figures compiled by the Central Statistics Office (CSO) show that while overall household spending on goods and services dropped by €10 billion in 2020, two thirds of that – €6.5 billion – was specific to hospitality which has increasingly felt the pinch from Covid-19 related changes in public behaviour.

A shift away from licensed premises and towards the relative perceived safety of home is also reflected by a €0.5 billion rise in household spending on alcohol for domestic consumption.

The CSO's Economic Life and Covid-19 in Ireland 2020-2021 analysis, published on Monday, shows people's gross savings last year increased by 166 per cent to €31.5 billion, another strong indication of less money being spent in businesses.

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The data is designed to show the economic impact of the pandemic by comparing activity with the time period immediately leading up to it.

“The effects of the pandemic were not uniformly experienced,” it notes.

The toll taken on the hospitality sector in the context of public health measures has been a constant theme of pandemic response. Last week, following the latest round of restrictions including 8pm closing times, the Restaurants Association of Ireland said hospitality had been “devastated” and was now concerned for future viability.

"The loss of income over Christmas is about more than just the festive season, it is about surviving the winter months," said chief executive Adrian Cummins, predicting staff layoffs of about 60 per cent during Christmas week, an ordinarily manic time for hospitality businesses.

Unemployment

As with other aspects of the health crisis, unemployment has hit sectors disproportionately – while the information and communication area had 20 per cent more employees in the second quarter of this year, accommodation and food services had almost a third fewer.

The CSO report shows that more than 870,000 people availed of pandemic unemployment payments (PUP) between March 2020 and the end of last August.

Not all consumer spending patterns have been bleak. Households spent less on goods and services throughout 2020 but by the second quarter of this year, retail sale volumes were 8.7 per cent higher than in the pre-pandemic 2019 quarter. Based on gross domestic product (GDP), the economy expanded by almost 6 per cent in 2020.

The value of exports also increased by €9.5 billion (6.2 per cent) in 2020 compared with 2019, although imports fell by €4 billion (4.3 per cent).

In other areas, house completions fell by 536 units in 2020 compared with 2019 but by the second quarter of this year they were at a higher level than in 2019. The wholesale cost of building and construction materials continue to rise, reaching 5.7 per cent extra at the end of the first half of 2021.

Government expenditure increased by €15.7 billion last year, mainly due to spending on Covid-19 measures. Revenues fell €4.5 billion.