9th June 2010: Consumers saving less as confidence in economy rises

There has been a sharp increase in the percentage of those expecting the recession to be over within the next 12 months. And this has resulted in consumers saving less, a number of surveys have shown. Four out of 10 people now believe that the worst is over for the Irish economy.This is compared with a year ago when the opposite was the case, according to the latest AIB/Amarach Recovery Indicator survey which was published yesterday.

Fewer than four in 10 Irish people think that the economic situation is bad and getting worse, down from seven in 10 a year ago. Over a third think that the economic situation has stabilised (up from just 14pc in April 2009). And a quarter think it is showing signs of recovery (up from just 8pc a year ago).

Young people and women generally account for the biggest improvements in optimism in the past 12 months. Women are now more optimistic about the economic situation than men, reversing the situation that prevailed a year ago. Against a background of bad news since April 2009, the majority of adults in Ireland still continue to say that they experience happiness and enjoyment a lot. Paying off debts remains a major financial priority. Six out of 10 adults believe reducing their debt has become a top priority.

When asked what they would do with a "surprise prize" of €10,000, the average response was to save just over €4,000 of the windfall. Another €3,000 would be put towards paying down debts, and then spending the balance of just under €3,000, according to the AIB/Amarach research. And a separate savings survey shows that people are continuing to save but are putting aside smaller amounts of money than they were previously. This is largely because they feel less economically insecure. The average consumer is now saving almost €1,000 less a year in a sign that they are less concerned about the economic environment, according to the EBS research.

Some €3,667 is being put aside every year now by the average consumer, the research indicates. And consumers are more likely to save for a big personal expenditure like a holiday rather than use their credit card as they would have done in the past. Some eight out of 10 respondents to the survey said they would save for the summer break rather than borrowing the money. And people are getting more confident about their ability to manage their money. Almost seven out of 10 people believe they are now better at making their money stretch than they were a year ago. However, there are still a large number of consumers being forced to dip into their savings to fund day-to-day living expenses.

Source –Independent.ie