Marginal Bounce in May Sentiment Survey but Irish Consumers Remain Anxious

Posted on: 23 May 2025

• Pullback in tariff threats eases consumers economic worries slightly

• Cost concerns continue as grocery bills rise

• Special survey question focusses on consumers capacity to cope with an unexpected bill for €1000 

  • 37% of consumers would rely on savings in a financial emergency

  • 18% would use current incomes to handle such a problem

  • 15% of consumers say they couldn’t deal with an unexpected financial outlay

• Overall survey highlights three-tier breakdown of Irish consumers household financial circumstances

  • Just over half of Irish consumers could be regarded as financially ‘comfortable’ at present

  • About one-in-four consumers might be seen as ‘clinging on’ in financial difficulty

  • Around one-in-five could be described as ‘coping’ but this share has declined somewhat as consumer circumstances diverge 

 
Speaking on the release of the May data and analysis, David Malone, CEO of the Irish League of Credit Unions noted; “The special question in the May Credit Union Consumer Sentiment Survey highlights the wide range of conditions facing Irish consumers at present. While many are reasonably comfortable at present and planning a better future, others would face substantial problems in the event of an unexpected expense or bill. As always, credit union members can rely on their local credit union to support them through both the financial emergencies and opportunities they encounter".
 

Summary

Irish consumer confidence improved marginally in May as tariff threats eased slightly but continuing downside risks to the economy and some signs of renewed pressure on household finances mean sentiment remains soft and continues to signal a nervous Irish consumer.

With some roll-back of the scale and timing of increased tariffs in recent weeks and a sequence of largely reassuring domestic economic releases, a very slight pick-up in Irish consumer sentiment in May is not altogether surprising. However, the latest survey reading still suggests Irish consumers remain gloomy, with confidence remaining well below the level of a year ago and its long-term trend.   

The weakest elements of the May survey reading related to household finances, likely reflecting a pick-up in grocery bills of late which suggests many consumers continue to experience strains on household finances.
Responses to a special question asked alongside the May sentiment survey suggest ongoing impacts from the cost-of-living crisis and also highlight substantial differences in financial circumstances across the spectrum of Irish consumers.

While just over half of Irish consumers could weather a financial emergency by drawing on savings or income, around one-in-five say they would be unable to cope with an unexpected financial outlay of €1000.  
 

As the table below indicates, the Credit Union Consumer Sentiment Survey (in partnership with Core Research) shows an index reading of 60.8 in May, up marginally on April’s 58.7 figure but significantly lower than the 74.9 figure seen as recently as January.  The May survey reading is also some distance below the long-term survey average of 84.0.

While the slight uptick in the May sentiment reading should be seen as positive in that it suggests Irish consumers are both able and willing to see small traces of sunlight in a dark economic sky, the general tone of the of the survey suggests Irish consumers remain nervous about the economic outlook and negative about their own household finances. The mixed elements of the survey in May also suggest that good weather didn’t drive a broadly based improvement in the mood of Irish consumers.
 

As far as frightened consumers go, it’s America first

As the diagram below illustrates, the preliminary reading of US consumer sentiment for May showed a further fall, albeit much smaller than the steep declines of the previous four months. The survey authors note that American consumers were much more negative about their household finances in May.

While some paring back of tariffs may have cushioned the fall in US consumer confidence, the survey suggests there are major concerns about the impact of even slightly tempered tariffs on the cost-of-living in the US, with consumers’ one year ahead inflation expectations jumping to 7.3% from 6.5% in April.

In contrast to the US data, Euro area consumer confidence improved in May and recovered almost two-thirds of the decline seen in April. Although the May reading remains well below the long-term average for that survey, the month-on-month improvement was notably stronger than that seen in the Irish sentiment survey which only recovered about a quarter of the losses seen in April.   

Economic worries ease but household finances remain an issue

The slight improvement in Irish consumer sentiment in May was driven by a limited easing in concerns about the outlook of the economy and jobs which more than offset a slight weakening in consumers assessments of their own personal finances.

It remains the case that Irish consumers expect a deterioration in both the economy and job prospects over the next twelve months, but the May survey saw a slight step-back from the particularly negative views formed in the aftermath of the early April announcements of dramatic increases in tariffs on goods going to the US.
The May survey period saw some reassuring developments in the shape of a further softening of pronouncements on trade by the White House as well as generally positive Irish economic data including a strong rise in first quarter GDP and encouraging Exchequer returns for the first four months.

There was also an easing from the apocalyptic tone of much of the early commentary on tariffs. This was helped by new forecasts from the Dept of Finance, released on May 6^th, which suggest that while the impact of tariffs on the Irish economy will be material, it should be manageable.

The new official forecasts suggest that the most commonly used indicator of domestic demand is expected to slow from 2.7% in 2024, to 2% in 2025, and to 1.75%% in 2026, suggesting the persistence of softer but still clearly positive trends in Irish economic activity.

The strongest improvement in sentiment between April and May occurred in relation to the outlook for jobs. Again, as is the case in relation to consumer views in relation to the broader outlook for the economy, this likely reflects a partial correction of the thinking that prompted a sharp weakening in sentiment in April.

The survey period saw the unemployment rate fall from 4.4% in March to 4.1% in April while the new Dept of Finance forecasts suggest that the persistence of current tariffs might mean employment in the Irish economy in 2026 would be 76k higher than in 2024 rather than 96k higher.

Although recent weeks have seen further warnings about threats to jobs in a range of Tech companies, the survey period also saw a range of new job announcements, suggesting the jobs market remains reasonably healthy if not nearly as ‘hot’ as in recent years. 

In contrast to the slight easing in concerns about the ‘macro’ outlook, Irish consumers further downgraded their thinking in relation to how their household finances have developed through the past year, making this the weakest element of the May reading. While the outlook for household finances over the next twelve months was effectively unchanged, this should be seen in the context of that being the weakest element of the April survey reading.  

Our sense is that renewed consumer concerns around their household finances owe much to a continuing step-up in grocery price inflation that has translated into ongoing and somewhat unexpected financial strains for significant numbers of consumers.

April price increases for a variety of consumer services ranging from streaming to health insurance may have further encouraged a sense of a climate of continuing cost pressures. In these circumstances, it is scarcely surprising that there was also a slight weakening in consumer spending plans.
In summary, the tone of the May sentiment survey suggests consumers are slightly less nervous about an apocalyptic collapse of the Irish economy than they were a month ago but there is still a strong sense that economic and financial conditions will be very challenging.

Alongside the predominant influence of the economic and financial fallout from a poorer outlook for global trade, there also tentative signs that Irish consumers are becoming more nervous about renewed upward pressure on living costs.
 

Section II; Widely varying capacity to handle an unexpected bill highlights three tier nature of Irish consumers financial circumstances   

The May Credit Union Consumer Sentiment Survey (in partnership with Core Research) contained an additional question focussed on Irish households’ capacity to weather a financial emergency, as we have done for the past five years. This is based on a similar question asked in the regular ‘Report on the Economic Well-Being of U.S. households’ conducted each year by the US Federal Reserve.

The responses given by Irish consumers to the question ‘How would your household deal with an unexpected financial emergency costing €1000?’ are shown in the diagram below for the May 2025 sentiment survey alongside the responses given in previous years.

‘Rainy day’ savings to the rescue for some

As the diagram indicates, the most common way Irish consumers would handle a financial emergency at present, as has been the case through the previous five years, would be to draw down savings. Just over a third of consumers (37%) say that they would call on savings in the event of an unexpected financial problem. As the diagram shows, the share of consumers resorting to savings has been trending down in the past two years from the 2023 peak of 44%.

The slightly reduced reliance on savings in the 2025 survey could reflect some consumers having drawn down Covid-era savings or requiring them for other purposes such as a deposit for a house purchase. It may also be that, in a more uncertain environment, that some consumers are trying to build a higher level of precautionary or long-term savings.  As the overall level of household deposits has continued to increase, these results might also be consistent with a greater concentration of savings in wealthier households of late.

As might be expected, there was a strong positive correlation between income and capacity to use savings in a financial emergency in the 2025 survey.  Over 65’s were the age group most likely to draw on savings, followed by those aged 25 to 34, perhaps reflecting less family-related financial commitments in these demographics. Not surprisingly, those aged under 25 tended not to say they would use savings.
 

Improving incomes offering support more widely

The 2025 survey results also show a small increase in those who say they would use their income to handle a financial emergency costing €1000 to just under one in five consumers (18%).  There has been a modest trend increase in reliance on incomes through the past six years that may reflect benefits from a resilient economy and an easing in cost-of-living strains for some consumers. Some element of this uptick could also reflect a switch necessitated by depleted or spoken-for savings.  

Again, as would be expected, the share of responses in this category in the 2025 survey rose with income, and those making ends with ease were nearly three times as likely to use their incomes to meet a financial emergency as those now facing difficulties in this regard. In the same vein, males were almost twice as likely to cite this response as females.

Perhaps surprisingly, the age group most likely to draw on their incomes in a financial emergency were the under 25’s, followed by the over 65’s- a result that may speak of widely differing income circumstances within these age groups.

Significant numbers don’t have capacity to cope

It remains the case that a significant 15% of Irish consumers say they would be unable to cope with a financial emergency costing €1000 in 2025. While this is lower than the peak 17% share reported in 2023, it still represents a higher share than the 7% of consumers who said they would be unable to handle a financial emergency costing €1000 in the 2021 survey. In that respect, it suggests continuing strains on household finances in Ireland from the recent cost-of-living crisis.

It may be worth trying to reconcile the incidence of this response in the 2025 survey with a clear improvement in overall ‘macro’ conditions in the Irish economy through the past year. While aggregate household income increased in ‘real’ or inflation-adjusted terms, the number of households is likely to have increased faster, meaning that, on average, household spending power has declined.

Moreover, while inflation has eased over the past year, it has started to pick up again in recent months, and far more importantly, consumer prices have not retraced any of the sharp increases of recent years. In these circumstances, it is not entirely surprising that significant numbers of Irish consumers say they would struggle to cope with a financial emergency at present.  

Those on higher incomes are less likely to say they couldn’t handle a financial emergency in the 2025 survey as are those who say they are currently making ends meet with ease. However, this response was altogether more common among females than males.

This response was also most common among those aged between 45 and 64 while those aged 65 and over were the demographic least likely to give this response, perhaps suggesting a heavy burden of ‘fixed’ household costs among the middle-aged leave many with little capacity to cope with the unexpected.

While there are relatively small numbers of consumers in most other categories of responses, the survey suggests a somewhat greater incidence of reliance on financial lenders other than on banks and credit unions, or on credit cards.

This response was more prevalent among those on low incomes and those facing difficulties making ends meet. This might hint at the worrisome sight of a small but not insignificant group of consumers who are both cash and credit-constrained. The very small number who would resort to selling something would also fall under this heading.

Incidentally, the latest data for the comparable US survey which relate to 2023 found that 13% of US consumers would be unable to deal with a financial emergency costing $400 while a further 7% would sell something. The bulk of responses to a slightly differently worded question indicated consumers would either put it on a credit card or use money in their bank accounts at present.

Some Conclusions
Overall, the 2025 ‘financial emergency’ survey would seem to emphasise an important if often overlooked consideration in relation to the circumstances of the Irish consumer at present.

Financial circumstances and conditions continue to vary markedly across Irish households. While that may not appear surprising, it counters the widely adopted economic assumption of the ‘representative agent’ which implies that a rising ‘macro’ tide must inevitably lift all boats.  In that regard, it sheds light on why, in a ‘Great’ Irish economy, consumer sentiment suggests so many may be ‘grumpy’.

Drawing together those who can meet an unexpected financial emergency through savings or from their current incomes, the 2025 survey might suggest that a little over half of Irish consumers might be described as ‘comfortable’ at present.

At the other end of the financial spectrum, roughly one in four Irish consumers might be considered to be ‘clinging on’. This grouping includes those who say they could not handle a financial emergency at present as well as those who would resort to borrowing from a lender other than a bank or credit union and those who would sell something.

In the middle are another grouping that amounts to about one in five Irish consumers who are ‘coping’ in that they would meet an unexpected financial difficulty by borrowing from family or friends, or from a bank or credit union, or by using a credit card.   

There are no dramatic changes to the shares of these three groupings over the past five or six years but, at the margin, there are slight increases in the numbers both of consumers who are ‘comfortable’ and those who are ‘clinging on’. This may go some way towards explaining the increasing incidence of both ‘boomtime’ and ‘doomtime’ commentaries in mainstream and social media.

From a policy perspective, these survey findings run counter to the widely heard argument that lower inflation and rising aggregate incomes mean that further fiscal supports are no longer required. Beyond the immediate strains highlighted in the survey, the evidence at home, and, in many instances, more dangerously abroad, is that economic and social fracture is damaging and destabilising. Those framing Budget ’26 need to be conscious that trade threats are not the only challenge the Irish economy faces at present.   

The Credit Union Irish Consumer Sentiment Survey is a monthly survey of a nationally representative sample of 1,000 adults. Since May 2019, Core Research have undertaken the survey administration and data collection for the Survey. This month’s survey was live between the 7^th – 16^th May 2025.