With Christmas around the corner and little sign of seasonal cheer, Sean Finnan examines the effect economic uncertainty on consumer spending habits
As much as we are reassured by our government that their application to the International Monetary Fund (IMF) will have no effect on their decision making in the upcoming budget, there is an undeniable uncertainty holding the spirit of Christmas at ransom. With everything on the agenda for the upcoming budget, from a reduction in the minimum wage to a decrease in the social welfare, it’s no surprise that consumer spending over the festive season is expected to fall by ten per cent compared to previous years.
In a survey conducted at the end of September, Deloitte took into consideration a number of Irish households and predicted that said Irish households – on average – would spend an estimated €1,020 over Christmas. This is a ten per cent reduction on last year and came before the recent revelations that Ireland has applied for a loan from the IMF, which could certainly be seen to increase uncertainty.
One of the reasons Deloitte gave for the falling Christmas spending was “pervading pessimism” that encourages Irish consumers to be thriftier with their money. But this outlook can hardly be surprising as Ireland sinks deeper and deeper into debt with little sight of the improvements promised at that memorable budget of 2008.
The University Observer asked a number of students to find if they would be spending the same amount on Christmas this year as previous years. Alec Moloney, a first-year Veterinary Medicine student comments: “I’ll probably spend the same amount as other years.” While third-year Liberal Arts student Elizabeth O’Neill says: “it’s impossible this year anyway,” and cited the recession as the main reason for her reduction in spending.
Hugh McMahon, a first-year Business and Commerce student was not so sure. “Probably not the same amount. I’d say I’d just go out less or buy less but probably the same quality of things that I’ll be getting. But then again I could easily end up spending the same.”
From student opinions, it is clear that despite the recession, Christmas still holds enormous sway in helping consumers part with their hard-earned money. Compared to our European compatriots, we spend nearly twice as much during the holidays than the European average.
Is there a pressure in Ireland to spend a large amount on unnecessary gifts and food to live up to the ideal of a perfect Christmas? Arts student Rory McGillycuddy believes that the pressure lies for families with young children.
“I think for [families with] young kids, they don’t want to miss out on the experience of a happy Christmas, but as you get older, it’s not really a concern anymore.”
PRO of the St Vincent de Paul (SVP) branch in UCD, Eoin Lyons spoke of what he perceives to be the pressures that Christmas has on people and what SVP does to help families in trouble.
“There is more pressure this Christmas because of an increase in redundancies, heating bills, et cetera and there’s an expectation that’s there from previous years. There’s an expectation to have presents and keep it the same.”
Lyon also adds: “Kids don’t know that there is less money. They don’t relate that to the size of the present they’re getting, they expect to get the same as they have got in previous years.”
Such unrealistic expectations seem to cause the most trouble for families at Christmas. Currently, SVP is running a scheme called the generosity tree to help families struggling to cope with this scenario and to have presents to give to their children on Christmas morning.
Although the recession is causing an undeniable fall in living standards, it is clear that Christmas is still a time that people are willing to spend money on. Christmas is built on traditions and no matter the money problems people face, there seems to be a reluctance to break with these traditions. However, this year, online shopping is again expected to be the dominant market in which people conduct their shopping.
Another interesting aspect of Deloitte’s survey was that people are also spending more on gifts that are deemed to be more functional such as books, and value is now sought over expense; a feature that was lost during the Celtic Tiger years. It seems that the ghosts of Christmas past are keeping the tradition of spending ticking over for the present.