Consumer confidence is the key.

When I’m not sitting at home in front of my laptop writing this stuff, I work in an industry with both trade and retail aspects to it. From this viewpoint, I can tell you that consumer confidence is a serious issue in Ireland which is holding back the recovery, and needs to be addressed directly by the government. It’s my belief that the Irish public will not feel confident to loosen the purse strings until they start to see unemployment come down, and so feel more secure in their own jobs. That’s the key to everything else, because once they start to spend, unemployment will then come down. It’s a circle we need to start turning.

Yes, our exports are booming, and of course this is a good thing. But the fact is, most Irish people don’t work in export orientated businesses. They work in service sectors which serve Irish consumers, and as those consumers either haven’t got or are afraid to spend money in those sectors. If they’re not spending money, then those sectors are contracting and losing jobs. It really is as simple as that.

So how do we encourage people to spend money? Well, that’s a tricky one. Even if the government had money to give away in tax cuts, people, being sensible, would probably save most of that money out of fear that they might need it for necessities in the future. In short, we need money injected into the economy to be spent on labour intensive indigenous industries, and money that must be spent as opposed to squirreled away.

Here’s a few ideas:

1. A home improvement grant, whereby a homeowner could either deduct from their taxes or receive an actual grant of money to spend on the labour cost of improvements to their home or rental property. The idea being that people would (hopefully) add their own money to the project, hiring a tradesman/woman (yes, they are out there) to do jobs around the house. Admittedly, as someone who works in the construction industry, I have a bias. But I still think it’s worth considering. 

2. A tourism grant, for holidaying in Ireland. Quite simply, tourism related industries, restaurants and hotels, are labour intensive, so encouraging people to spend money in them is a good way to encourage employment. Again, the grant would have to be structured in such a way as to encourage new spending rather than substituting existing dining out, but that can be addressed by having a threshold to ensure people spend over a designated amount to claim the grant.

3. Allow people to sign on/off the dole on a daily basis. I keep hearing stories of people being offered short-term work, and refusing it because the DSP tells them that if they sign off, it will take six weeks to get back on. I don’t blame people for making that decision, they have to look to their own best interest. But this is madness. Why not let people sign off, and sign back on for a modest fee (€5)? Yes they will be working, and yes, they probably won’t be paying tax, but at least they’re not spending taxpayers money, and the modest rejoining fee will act as a revenue stream into the black market.

Of course, all this hinges on the government finding the money to fund these grants. That’s another day’s work.

2 thoughts on “Consumer confidence is the key.

  1. You point to unemployment as a drag on consumer confidence, but debt is also a major drag. That includes both government debt and private debt. While the government continues to have a very high deficit consumers will fear that future budgets will tax more and spend less. So while your suggested no 1 & 2 subsidies might encourage spending on one hand, unless they are paid for in a way that doesn’t add to government debt (or drag consumer spending in some other fashion) they may be self-defeating.

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