OVER HALF OF Irish consumers believe that the Covid-19 crisis will affect their household finances either substantially or somewhat. 

That’s according to the latest KBC Consumer Sentiment Index, which has been published today. 

The March survey found that about three in five (62.9%) consumers thought that the coronavirus would have a substantial or somewhat large effect on the Irish economy.

By April, this had increased sharply to nearly being universally felt, with almost nine in 10 (87.9%) of consumers giving this response. 

In March, about one in every three consumers (32.5%) thought the coronavirus would affect their household finances either substantially or somewhat. 

By April, this proportion had virtually doubled to about three in every five consumers (63.3%). 

Between March and April, the gap between those who thought the coronavirus would have an effect, whether slight or substantial, on the Irish economy and those who thought it would have an effect on their household finances narrowed from 29 percentage points in March to 10 percentage points in April. 

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Financial emergency

The April consumer sentiment survey asked how consumers would handle an unexpected financial emergency amounting to €1,000. 

The question was based on one asked by the US Federal Reserve in its annual survey on the financial wellbeing of US households. 

Just under half of consumers would weather a financial emergency either by using their current income (12%) or by dipping into their existing savings (32.5%), the survey found. 

About one in four consumers (27%) said they would borrow to pay for an unexpected emergency, with about a third of these using a credit card for that purpose. 

Around one in 10 consumers said they would borrow from a family member or a friend. 

Just under one in 10 said they would be unable to handle a financial difficulty of this size at present, while about half that number would use a financial lender other than a bank or credit union. 

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“These results emphasise the degree to which financial circumstances vary across Irish consumers,” the KBC analysis said. 

“The survey question was scheduled and intended to relate to circumstances very different from those currently prevailing,” it said. 

“However, with a range of government support measures providing significant support, the framing of the question may give some sense of the capacity of Irish consumers to handle sharply increased pressure on their household finances.” 

Analysis 

Overall, the results of April’s survey show that only marginally more Irish consumers envisage that Covid-19 will have a negative impact on the Irish economy as a whole than was the case in March. 

However, a larger number of consumers now envisage a negative impact on their own household finances than a month ago. 

“This is a reasonable adjustment in expectations, as the weeks in between the two survey periods saw the introduction of more stringent lockdown measures,” KBC’s analysis said. 

The KBC Consumer Sentiment survey is carried out monthly with a representative sample of 1,000 adults.