Trade War Threats see Irish Consumer Sentiment slide to two -year low in April

Posted on: 06 May 2025

• Sentiment falls sharply to lowest level since March 2023
• Drop in Irish consumer confidence comparable to but slightly larger than marked sentiment declines elsewhere
• Fall largely driven by fears about future rather than current financial strains
• Gap between current conditions and expectations for future is largest since ‘no deal’ Brexit threatened in late 2020  
• Special question focusses on home improvement spend
  • No sense of major pullback in planned spending on home improvements in spite of weaker sentiment reading
  • Almost half of Irish consumers say they made significant home improvement spend in past two years, with a further one in five spending on ‘refresh’ projects
  • Broadly similar numbers plan home improvement spend in next two years but more focus on ‘refresh’ projects
  • ​Savings still the main source of funding for home improvement spend (42% of consumers), with income (26%) and credit union loans (15%) also important   

​Summary

Irish consumer sentiment fell sharply but not surprisingly in April. The fear that a global trade war would lead to markedly weaker economic conditions in Ireland saw Irish consumer confidence drop to its weakest reading in two years.

The notably darker consumer mood in Ireland was mirrored in significantly poorer confidence data from other countries, with US consumer sentiment dropping to its second lowest monthly reading since 1953. 

The details of the April Credit Union Consumer Sentiment Survey (in partnership with Core Research) emphasise that fears of an uncertain but very threatening future dominate consumer thinking at present. Irish consumers are not seeing any dramatic change in their current circumstances but there is a strong sense that notably more difficult times lie ahead.

Exactly how far or how fast Irish economic conditions might weaken in the future remains unclear and subject to rapid and random changes on policy pronouncements from the White House and elsewhere. This makes it difficult for Irish consumers to assess how much to adjust their behaviour. A state of flux as well as fear is likely to dominate consumer sentiment and spending in coming months.  
 

Section I; Fears of much poorer future prompt sharp sentiment slide

 As the table above indicates, the Credit Union Consumer Sentiment Survey (in partnership with Core Research) shows an index reading of 58.7 in April, significantly lower than the 67.5 figure for March, and marking a second successive month of substantial decline in Irish consumer confidence.

It may be worth putting recent sentiment developments in context in terms of the history of the survey. The April sentiment number reading is the lowest in just over two years, since the March 2023 figure of 53.8. The April sentiment reading of 58.7 is now materially weaker than the 29-year survey average of 84.1 and also some distance below the average of the past five years.    

The change in consumer thinking in the past month is also significant. The 8.7-point month-on-month drop between March and April is the largest in just over two and a half years, since September 2022 which saw an 11.3-point drop.

Some sense of an increasingly turbulent environment for Irish consumers of late is suggested by the fact that the April drop is only the fifth largest in the past five years while it is the sixteenth largest in the 29-year history of the survey.

The clear message from recent sentiment readings is that Irish consumers are now altogether more nervous and negative about the economic and financial environment than they were at the start of this year. 
 

Confidence crashing globally on trade threats

It is also important to try and place the April sentiment reading for Ireland in an international context. The sharp fall in Irish consumer confidence in April was mirrored in large declines in similar sentiment metrics for other countries as the diagram below illustrates.


In the US, the influential University of Michigan sentiment measure fell from 57.0 in March to 52.2, the second lowest level in a series stretching back to 1953 (the lowest level, 50.0, was recorded in June 2022 when a surge in energy costs prompted a severe build-up of cost-of-living pressures).

The weakening in US consumer sentiment in April 2025 was driven by threats to household finances and the broader economy from trade wars and a related build-up in inflation. Expectations for year-ahead inflation surged to 6.5% from 5% in March and the survey authors note a ‘concerning’ weakening in expected household income growth and a particularly strong deterioration in sentiment among middle-income families.

As the diagram illustrates, the drop in sentiment across the Euro area was also large and led to an 18-month low for consumer confidence but the monthly change was less pronounced than for the US or Ireland.

While the current situation for activity and income growth is more fragile in Europe than elsewhere, the offsetting impacts of a defence-spending related boost to growth, the greater importance of intra-European trade, a mooted possible ceasefire in Ukraine and the delivery of further cuts in ECB interest rates may have all worked to moderate what was still a material drop in Euro area consumer confidence to an 18-month low in April.

Reflecting differences in the importance of a range of influences, the scale of decline varied widely, with many trade-focussed smaller countries seeing relatively large drops and Germany, where domestic factors act as a counterweight recording a somewhat smaller drop. 

We should also note that UK consumer confidence fell to a 17-month low in April, led by a marked downgrade to the economic outlook. The survey authors highlight the threat to household spending power from ‘multiple April cost increases in the form of utilities, council tax, stamp duty, and road tax’.     
 

April sentiment drop driven by fears for the future rather than current conditions facing Irish consumers

The drop in Irish consumer sentiment in April was broadly based, with all five main elements of the survey lower in April than in March.

However, as the diagram below illustrates, the scale of decline varied significantly depending on whether the specific survey element was focussed on current conditions (ICC) or expectations for the future (ICE) .

As the diagram illustrates, Irish consumers marked down current conditions materially (by 4.7 points) in April but the adjustment to their expectations for the year ahead was much greater (at 11.4 points).

The gap between the current conditions sub-index and the expectations sub-index in April, at 40.5-points, was at its widest since October 2020 (42.3-points) when the publication of the UK’s ‘Internal Market Bill’ sharply increased the threat of a ‘no-deal’ Brexit and prompted a dramatically poorer outlook for the Irish economy.  

We draw attention to this aspect of the survey because it suggests that any pullback in Irish household spending in the months ahead seems likely to be driven by fears about the future rather than current financial problems.

Any reining-in of spending driven by a precautionary motive should be notably less traumatic than one caused by pressing income or job losses. In this respect, the nature of the very real risks facing the Irish economy from a global trade war are very different in terms of the speed and type of fallout to those seen in the 2008 crash.
Indeed, the tone of responses to the special question in the April survey on home improvements (see section II below), given at the same time as the marked downgrade of sentiment, suggests Irish consumers still plan to make significant outlays on their homes.     

Not surprisingly, the sharpest downgrade to sentiment in April occurred in relation to the broad outlook for the Irish economy. With the survey taking place between April 5^th and 15^th, during which time there were an almost bewildering number of pronouncements, qualifications, postponements and rumours on trade measures and their possible economic repercussions. 

While some element of the sentiment downgrade to consumer thinking on the economic outlook may reflect markedly increased uncertainty, the larger part was understandably and appropriately driven by a view that the Ireland will suffer materially from the much-increased prospect of a fractured world trading system. 

The April survey saw a further substantial downgrade of the outlook for jobs, although the decline in this area of the survey was slightly smaller than seen in March. In part, this could be due to some efforts to clarify that earlier estimates of jobs at risk did not suggest an imminent drop in employment of 80k to 100k. In addition, the survey period saw a number of new job announcements across a range of sectors that suggest the jobs market is cooling rather than collapsing at present.

While the regular analysis has previously distinguished between ‘macro’ and ‘micro’ developments affecting the sentiment survey, this month’s analysis is more focussed on differences between current and expected developments.

In this context, it is notable that the weakening in consumer thinking in relation to the recent trend in their household finances and the current buying climate was notably less pronounced in the April survey than their assessment as to how their personal finances might develop over the coming year.

At the margin, a pick-up in inflation of late and a related firming of grocery price inflation may have encouraged a more negative view in relation to the outlook for spending power.

So too might official indications that there will be no cost-of-living package in next October’s Budget and the Minister for Finance’s inference that proposed adjustments to income taxes might also be in jeopardy.

However, our sense is that the main factor behind a sharp weakening of the outlook for household finances is the feared deterioration in the broader economic climate.

Because we feel that the current reality is one of improved although still markedly varied circumstances in household incomes and the risk of a poorer outlook is large but still latent, we think any pullback in Irish consumer spending in coming months will be modest in the absence of a further marked deterioration in the broader economic outlook.

Section II; Home is where the hope is? 

As usual, the Credit Union Consumer Sentiment Survey (in partnership with Core Research) included supplementary questions on topics of current interest.

For the April survey, we repeated the question asked in March 2024 focussed on Irish consumers’ current and planned spending on home improvements.

National accounts data suggest that the amount involved between major renovations and minor ‘refresh’ projects is greater than the amount spent on new homes and, as such, represents a significant element of overall economic activity as well as a substantial portion of the financial outlays of Irish households.

As the diagram above indicates, just under half of Irish consumers (47%) say they have undertaken significant home improvements in the past two years, up markedly from just over one in three consumers (37%) who gave this answer in the 2024 survey.

While consumers across all demographic headings undertook significant spending on home improvements, those having difficulties making ends meet at present, not surprisingly, reported a notably lower incidence than those making ends meet with ease. In the same vein, significant spending on home improvement was positively correlated with household income.

The age groups reporting the highest incidence of home improvement spend were under 35’s and those aged between 55 and 64. Difficulties in moving on and up the fabled ‘property ladder’ may be encouraging younger consumers to make alterations to make their accommodation more suitable to their current and future needs.

Our judgement is that a comparatively high incidence of home improvement spend among the 55 to 64 age group may owe something to ‘empty nesters’ and/or ‘re-nesters’ being financially able and wishing to ‘rightspec’ their properties for changed household circumstances involving either fewer or more occupants.   

Those with lower incomes, difficulty making ends meet and older age consumers tended to have a notably above average incidence among the 26% of consumers who have not undertaken any form of home improvement spend in recent years. There was a modest drop in the share of consumers reporting no home improvement spend compared to the 2024 survey outturn of 30%. 

The broad picture of improving household incomes and some easing in cost-of-living pressures saw more consumers say they have undertaken home improvement spend in the 2025 survey compared to 2024.

The diagram below indicates, perhaps surprisingly in light of the markedly weaker sentiment reading overall in April 2025, that Irish consumers now indicate that their planned spending on home improvement over the next two years is broadly similar to that planned a year ago.      

Although slightly fewer consumers plan to undertake major home improvement spending in the next two years than did so in the past two years (43% compared to 47%), that is still fractionally more than planned to undertake major spending in the 2024 survey (41% of consumers).

Moreover, the planned ‘refresh’ spending by 26% of consumers in the 2025 survey, if realised, would represent a clear increase on the 20% of consumers who undertook such spending in the past two years.

The demographic breakdown of these results suggests that those aged under 45 are far more likely to plan significant home improvement spending in coming years than those aged over 55. Conversely, those aged over 45 were more likely to plan ‘refresh’ spending on home improvements. Not surprisingly, planned home improvement spend was strongly positively correlated with income.

As in the comparable survey last year, the April 2025 Credit Union Consumer Sentiment Survey (in partnership with Core Research) also asked consumers how they are funding their home improvement spend.

As the diagram below indicates, funding patterns have not changed markedly. the most common approach, although cited by slightly fewer consumers in 2025 (42%) than in 2024 (45%) is reliance on savings.

Not surprisingly as was the case in the 2024 survey, this response tended to be more prevalent among those with higher incomes, among those not having difficulty making ends meet, and among older consumers.

Roughly one in four consumers (26%) say they will finance their home improvement spend from their current incomes. There was no strong correlation between these responses and respondents’ ages. However, there was a negative correlation between reliance on income and income levels, suggesting home improvements financed through income are more commonly minor outlays such as painting and decorating.

While there has been a very limited increase in personal borrowing in recent years, the survey results hint at a continuing caution on the part of Irish consumers about taking on debt, as the diagram illustrates.

Just one in four consumers (27% of respondents) say they will borrow to finance their home improvement spend.  Within this group, borrowing from credit unions is about twice as prevalent as borrowing from banks (15% against 8%) and borrowing on credit cards or from family is even less common (4%). Again, these results were very similar to those seen in the corresponding 2024 survey.

Borrowing to fund home improvements tended to be more prevalent among those aged 25 to 44. This response was also more commonly seen among those consumers citing difficulty making ends meet. Not surprisingly, younger borrowers who tend to undertake larger home improvement projects are likely to require external sources of funding.

However, the fact that consumers facing difficulties making ends meet are also borrowing to fund home improvement spend might suggest that, for some consumers, the associated spend relates more to necessary repairs and refurbishment rather than ‘improvements’ per se. 

Overall, the results of the 2025 special questions on home improvement spending results don’t suggest that fears of fallout from trade wars are leading to any marked pullback in planned home improvement spend.

With the 2025 survey finding that just 18% of consumers say they do not plan any home improvement spend in the next two years, the results instead hint at a broader uptake of spend on home improvement overall as the 2025 survey also reports that 26% of consumers say they did not undertake any home improvement spend in the past two years.


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 5^th – 15^th April 2025.