Jan 23, 2005

High spending Irish

This article from the UK Times - explains how higher incomes in Ireland means people are spending more - and sometimes more than they can really afford.

"THERE may be Mercedes-Benzes instead of Micras in Celtic tiger driveways, but living an Absolutely Fabulous-type lifestyle has left Irish people in financial straits.

Despite being declared among the world’s richest citizens, a new study reveals that many Irish adults are finding it tough to make ends meet. A Cost of Being Irish survey by Mintel, to be published this week, reveals that 40% are “feeling the pinch”. This is in spite of the recent finding by the Organisation for Economic Cooperation and Development (OECD) that Ireland has surpassed America for the first time in terms of economic wealth per head of population.

Economists say Mintel’s finding is evidence that lifestyle expectations have been over- inflated by the growth of the Celtic tiger. “Expectations are very different now,” said Dan McLaughlin, Bank of Ireland’s chief economist. “After having a low-income economy for our entire history, suddenly we have a rapidly growing one. People are taking full employment and low mortgage rates for granted.”

With waiting lists of a year for the €160,000 Porsche 911 turbo and women queuing up to buy €5,000 handbags in Brown Thomas, frugality has gone out the window. The number of convertible sports coup├ęs sold in Ireland last year was up 136% on 2003, and high-street shoppers’ spending was up 5.1% on the previous year.

With luxury labels such as Chanel — whose suits start at €2,000 — moving into stores such as Brown Thomas, the temptation to spend has never been higher.

But many are funding lavish lifestyles on credit, and people find themselves having to work longer hours to pay for the trappings of a lifestyle that includes long-haul holidays, spacious homes and designer clothes.

Mary Corcoran, a sociologist at NUI Maynooth, said: “People may say they are feeling the pinch, but what it may mean is they can’t take a second holiday or they’re finding it difficult to pay for the holiday home in Spain as well as the first house, or for the third car in the driveway. I think we’ve taken to the credit card culture with glee.

“The fact is that in the last decade a new means of consumption has cottoned on fast, and the ease with which you can spend is now much greater, from television to the internet. It’s a very different cultural context. Before you had to save, now you just put it on a credit card,” she said. “It’s a self-improvement thing and people do get caught up. Also, having a 24/7 shopping culture makes it difficult to stop — you can shop in the middle of the night.

“You can’t dispute the increase in real income but I think the choices available to people have changed through branding and built-in obsolescence. I don’t think that people feel happy about it but there are structured choices out there facing us.”

The Labour TD Joan Burton said rosy economic figures and the mass media were spurring modern lifestyles that are out of kilter with what people can afford in “rip-off Ireland”. “Expectations have grown enormously,” said Burton. “The reality is that everyone has done better out of the Celtic tiger, but some people have done much better than others.

“Car and clothes sales are up, but a lot of that is helped by credit and by borrowing. The Central Bank in each of its last reviews has been warning that the levels of credit in Ireland have grown extraordinarily high.”

Dave Walsh, 28, from Clonmel, a property developer who has a new house and BMW, is one of those who finds he has little to spare.

“I try to live within my budget from what I earn, but I can’t save,” said Walsh, who spends half of his net income on his house and car, and the other half on living expenses. “I’ve taken one holiday in two years. Money is one factor but I’m also too busy making my business work.”

Walsh said that when he returned home in 1999 after a year travelling abroad he saw people who had barely been able to afford a pint when he left to drinking €50 bottles of champagne 12 months later. “I was shocked at how extravagant people had become and how much available cash there was. Whether it’s disposable income or borrowed I don’t know, but when I left there wasn’t access to large amounts of money.

“Money has changed us as a nation from being very humble to brash, fast-living and no-nonsense, and we demand a lot from each other. We’ve become an arrogant, self-obsessed nation in certain ways.”

No comments: