Now that the Programme is in place, the bond market can be left for a while to digest its previous meals; but that does not remove the necessity to stay on the agreed fiscal path: the new lenders – partners though they are – also need to be convinced of Ireland’s societal capacity for the fiscal adjustment essential to bring the debt dynamics under control.
There were modest increases last year, but spending decelerated over the first half of this year in the face of higher oil prices and the continued deleveraging of household balance sheets. Consumers continue to pay down debt and work to rebuild their net worth by saving more and consuming less. This is a perfectly natural and rational reaction to events.