The 19% reduction in car sales last month compared to January 2012 is further evidence that budget measures introduced in December are biting hard and will have a negative effect on the domestic economy in 2013, according to Fianna Fáil Finance Spokesperson Michael McGrath.
Deputy McGrath stated: “Over the past number of weeks, ordinary families have witnessed their disposable income take a further hit with the increase in PRSI, the cut to child benefit and increases in a host of other taxes and charges. Next month, the Revenue will start sending letters to homeowners setting out their obligation to pay a property tax in July. Households are also due to receive letters about the start of a water metering programme as a precursor to water charges in 2014.
“Against this backdrop, there can be no surprise that car sales have dropped significantly. It is difficult to see how consumers will have the money – let alone confidence – to effect any recovery in the domestic economy in 2013. Indeed, in a distinctly defeatist attitude, the government is forecasting that private consumption will contract this year by 0.5% and that we will have an unemployment rate of 14.6% throughout 2013.
“The government doesn’t seem to realise that you cannot rely on exports alone to achieve a recovery in our economy. The reality is that the vast majority of workers rely on the health of the domestic economy for their jobs. The job losses in the retail sector since the start of the year are deeply disturbing and should be setting off the alarm bells in government buildings.
“With a further €3.1 billion of a budgetary adjustment planned for 2014, it is essential that the government secures a breakthrough deal on the promissory notes with the ECB and also that the ESM is deployed before Budget 2014 to relieve the burden on the State of recapitalising the surviving banks. The government needs to adopt a far more forthright approach in its negotiations with the ECB and insist that a meaningful deal simply has to be delivered. Otherwise, the prospects of any tangible recovery in the domestic economy – and by association improved employment levels – will remain elusive.”