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Business sentiment rises on Brexit deal hopes but consumers remain wary

A new economic survey, which combines consumer and business sentiment, rose slightly in October as the risk of a Halloween Brexit crash out receded. 

A new economic survey, which combines consumer and business sentiment, rose slightly in October as the risk of a Halloween Brexit crash out receded. 

The Bank of Ireland Economic Pulse stood at 77 in October, up 0.8 on the previous month but 15.6 lower than a year ago.

Bank of Ireland said that Budget 2020 and Brexit formed the backdrop to the latest survey. It said that while political advances made towards striking a new deal helped the business mood, it was not enough to lift the mood of consumers.

The Consumer Pulse fell 4.5 points to a new low of 69.9 in October, the fourth consecutive month it has fallen. 

Today’s survey revealed that households were gloomier about the economy and their own finances.

Buying sentiment also took a knock as Brexit weighed on minds and Budget 2020 did little for consumers’ pockets. 

Just a quarter of those surveyed considered it a good time to purchase big ticket items such as furniture and electrical goods, while one in two said they are holding out on spending because they are not certain which way economic policy is going to go.

Meanwhile, the Business Pulse rose to 78.8 in October, 2.2 higher than in September but down 14.3 on a year ago.

Bank of Ireland noted that the picture was mixed across the sectors with the services and construction pulses gaining ground but the retail and industry pulses slipping back. 

“Looking further ahead, the October data indicates that growth ambitions are holding steady, with three in five firms planning on expanding in the next one to three years,” Bank of Ireland said.

“October’s Economic Pulse was a touch firmer as the risk of a no deal Brexit at the end of the month receded, and hopes of a last minute deal grew,” commented Bank of Ireland’s chief economist Dr Loretta O’Sullivan. 

She said that households are not overly convinced  by recent developments though, with consumer sentiment tracking lower again this month and one in two indicating they are holding out on spending. 

“However, there was a sense of relief among firms that a Halloween crash out was increasingly unlikely and business sentiment edged higher. That said, the mood remains relatively subdued overall reflecting the fact that there is no such thing as a good Brexit outcome,” she added.

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