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Irish consumers buoyed by Brexit deal in December

DUBLIN (Reuters) – Irish consumer sentiment improved in December to post the first back-to-back monthly gain in four years as the risk of a damaging ‘no-deal’ Brexit receded, according to a survey published on Friday.

Ireland has remained the European Union’s fastest growing economy during three years of Brexit talks, but consumer confidence faltered when it seemed that its nearest neighbor could leave the bloc without agreeing to a withdrawal deal.

The KBC Bank consumer sentiment index rose to 81.4 in December, from 77.1 in November and the seven-year low of 69.5 in October.

The improvement represents the largest two-month gain since January 2015, though sentiment is still some way short of the 17-year-high of 110.4 reached in early 2018.

Austin Hughes, chief economist at KBC Ireland, warned that respondents probably saw Brexit risks as reduced rather than gone entirely, but said the improvement revealed a “small but potentially significant change in the mood of Irish consumers”.

“The outperformance of UK and Irish consumer confidence measures in late 2019 suggests a key local concern has eased, at least for now,” he said.

“The question is whether that relief will prove sufficient to spark a material step-up in spending on either side of the Irish Sea in early 2020.”

On Monday, a Purchasing Managers’ Index (PMI) survey of Irish services firms rose for the second month in succession, expanding at the fastest pace since the middle of last year.

(Reporting by Graham Fahy; Editing by Kevin Liffey)