Will 2025 leave us richer or poorer?
2024 was a slightly better year for hard-pressed consumers as inflation began to ease, energy prices fell moderately, and mortgage rates were cut.
So what does 2025 have in store?
Let’s take a look at what might impact on your pocket over the coming year…
Pensions
Expect to hear lots of talk about pensions and auto-enrolment in 2025.
An auto-enrolment scheme, where workers are automatically enrolled in a pension into which both the Government and the employer make contributions, has long been mooted in Ireland, and similar schemes have been in operation in the UK and Australia for years.
Now, after years and years of delays and false starts, the scheme is finally set to go live from next September.
If you’re already contributing to a pension, then the scheme won't really have much of an impact on you. But if you’re not, then you’ll have to start paying into one, so you could see a fall in your take home pay from next autumn.
You can learn more about auto-enrolment here.
Amazon
Fans of online shopping should be happy as Amazon is set to launch its dedicated Irish website sometime in 2025, which it says will enhance the retail experience for new and existing customers.
Ever since Amazon started selling online, Irish shoppers have had to use Amazon stores in other countries - most commonly the UK which was the de facto Irish site. However the German Amazon store has also been popular, though many products often aren't available for delivery to Ireland.
But ever since the UK left the EU, and with it came the imposition of new customs duty charges and VAT costs, the calls for an Irish Amazon site have grown louder.
According to Amazon, over 1,000 small and medium-sized Irish enterprises sell with the company already, generating over €170 million in export sales in 2022. And this will hopefully grow over the coming years following the launch of Amazon.ie.
The launch of an Irish Amazon store will also force other retailers here to up their game, particularly around delivery times, which can only be a good thing for consumers.
You can learn more about Amazon's launch here.
Trump's tariffs
2025 sees Donald Trump head back to the White House for what will be another four more interesting years to say the least.
The president elect has plans to impose a range of tariffs on all types of goods being imported into the US.
This could have an impact on economic growth here in Ireland given our big trading relationship with the US.
But if the EU retaliates with tariffs on US goods entering the EU, then consumers could see a range of popular American goods increase in price.
Energy
The end of 2023 and early 2024 saw most of the country's energy suppliers cut their prices twice. While SSE Airtricity and Electric Ireland reduced their prices for a third time in the second half of the year..
It means gas and electricity prices in Ireland are now around 25% to 30% below their peak at the height of the energy crisis. But they still remain high.
So will they fall further in 2025?
Don’t bet on it.
Wholesale gas prices are still over double, what would until recently, have been considered normal levels. This doesn’t look like changing much over the coming year. And of course any further outbreak of war or conflict could see prices shoot even higher.
Wholesale electricity prices also remain very high. They look like ending 2024 at over €100 per megawatt hour for the year. Only a bit below what they averaged for 2023 and still well above the €35 to €40 price that was considered normal before the war in Ukraine broke out.
However, wholesale prices only make up around half of a household’s energy bill. There is also VAT, Government levies, grid fees and the suppliers’ operating costs to take into account.
At the end of this April, the Government is due to hike back up the rate of VAT on gas and electricity from 9% to 13.5%. If implemented, this would add around €70 a year to the average electricity bill and €60 a year to the average annual gas bill. And of course the carbon tax goes up again next May. That will add another €20 or so to the average annual gas bill.
The cost for maintaining the country’s gas and electricity grids also continues to rise. The challenge of trying to get to Net Zero and dealing with a rapidly growing population is also requiring big investment in our grids.
In August, the CRU sanctioned an increase in grid or ‘network’ fees that added the equivalent of €60 a year to the average annual gas bill and over €100 to the average annual electricity bill. Suppliers can choose to absorb these increased fees as part of the cost of doing business or pass them on. But if these fees are increased again next year by a similar amount then it will limit suppliers’ ability to reduce prices even if wholesale prices do fall.
So regardless of what happens to wholesale prices, there will be upward pressure on consumer’s energy bills regardless.
In many ways, if we get to the end of 2025 with prices the same as they are now, it could be considered a positive. But we definitely won’t return to the prices we saw before the war in Ukraine any time soon.
Mortgages
2024 saw the European Central Bank cut interest rates four times. And it’s expected that it’ll reduce rates several more times in 2025 to try to revive a flagging Eurozone economy.
So those with a mortgage should be happy as 2025 should see all the main lenders continue to reduce their rates. At present a mortgage rate as low as 3% (albeit with several caveats) is now available and a rate below 3% will likely be launched at some stage in 2025.
Tracker customers will benefit the most. But also benefiting will be the thousands of so-called mortgage prisoners whose loans were sold to vulture funds and some of whom are still paying extortionate variable rates as high as 7% or more right now.
Whether you're looking to buy, move, or switch over the coming year, you can compare interest rates across all lenders on bonkers.ie using our free mortgage calculator.
Savings
But it’s not all good news. There are also losers to falling interest rates. Savers are likely to start seeing their rates fall.
Irish households currently have almost €160 billion resting on deposit. But the majority of the money is still in accounts that pay little to no interest.
So if you have money on deposit, you should look at locking into the higher rates while they’re still available.
You can easily find the best return for your money on bonkers.ie.
Use our savings comparison tool to compare rates from the likes of AIB, Bank of Ireland, PTSB, Trade Republic, Raisin, Bunq and more in just minutes.
Health insurance
2024 saw the three main health insurers (VHI, Irish Life, and Laya - now Axa) announce yet more price hikes.
And 2025 will start off on a bum note for Irish Life customers as the insurer will increases its prices by an average of 3.7% from January.
Come January, when the vast majority of customers renew their plans, policyholders could be looking at premium increases of 20% or more.
In better news, a new insurer Level Health entered the market which might help keep prices under control. But we'd still expect more premium hikes in 2025, albeit at a lower level than the past two years.
Communications
Broadband, mobile and TV services will all become more expensive next year.
In 2021 and 2022 many telecommunications providers started announcing inflation-busting price increases under so-called 'annual price adjustments'.
Vodafone has started increasing its plans by the annual CPI rate of inflation as of January every year PLUS 3%, with the change taking place every April. Eir has started doing the same.
With the rate of inflation for 2024 likely to come in at around 2%, Eir and Vodafone customers will see their bills jump by close to 5% in April.
However households can beat these increases by switching with lots of good deals on offer from all the main providers to new customers.
Some streaming services are likely to increase in price yet again as streaming services continue to spend a fortune on producing more and more content for insatiable viewers.
