Consumer and business sentiment nosedived in October as Covid-19 continues to wreak havoc on the economy, according to Bank of Ireland research.

The Bank of Ireland Economic Pulse came in at 56.6 in October 2020, down 8.6 on September and 20.5 lower than the same time in 2019.

The Economic Pulse is based on surveys carried out with 1,000 households and some 2,000 businesses on a range of topics, including the economy, their financial situation, spending plans, house price expectations and business activity.

According to BoI, the ongoing pandemic and Brexit were topics to the fore in October’s Economic Pulse. The business segment of the pulse recorded sharp month-on-month and year-on-year falls. While Budget 2021 included additional supports for firms, Covid-19 and Brexit-related uncertainty weighed on the mood.

The Services Pulse saw the biggest drop amid further restrictions on social interactions and the hospitality sector (businesses in the latter were extremely downbeat about prospects for activity in the next three months).

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The October survey also looked at growth ambitions over the medium term. The results show that 56% of firms are planning on expanding in the next one to three years, one in 10 (11%) intend to scale down.

Bank of Ireland’s Consumer Pulse was the weakest reading on record, as households took a pessimistic view of economic prospects, job growth and Brexit’s impact. Three in four respondents expect unemployment to rise, while four in five considered it a good time to save rather than spend.

Commenting on the findings, BoI chief economist Loretta O’Sullivan said that the results were disappointing but not surprising given the backdrop.

“Heightened Covid-19 and Brexit uncertainty saw households and firms pare back their expectations for the economy, business activity and jobs, and with Level 5 restrictions now imposed, the growth outlook for the fourth quarter of the year is challenging,” O’Sullivan added.