An additional €16 billion placed on deposit by Irish households last year was significantly higher than the €12 billion set aside at the height of the Special Saving Incentive Accounts (SSIAs) incentive in 2006, new figures from the Central Statistics Office (CSO) show.
The figures were contained in the agency’s latest institutional sector accounts, which also show that the gross disposable income of Irish households grew by €9.3 billion (8 per cent) in 2020 due to the “unprecedented restrictions on travel and other activities”.
The Central Bank has predicted turbo-charged growth of 15.3 per cent this year on the back of a rapid resurgence in consumer spending linked to the unwinding of excess savings built up during the pandemic.
Much of the SSIA money in 2000s was used to pay for deposits on housing. In the last decade investment in new homes has been more modest, with households adding to their more liquid assets, the CSO said.
“In 2020, because of the pandemic, the trend towards deposits over home purchase accelerated rapidly,” it said.
The pandemic saw an increase in the gross disposable income of Irish households, which rose by €9.3 billion in 2020,with restrictions limiting how much people could spend.
“Bars were shut, restaurants were restricted to take-away only, and many hotels and shops were closed or had their activities curtailed,” the agency said.
The largest contributor to household income was “compensation of employees” – wages, salaries, benefit-in-kind and other labour costs. In 2020, this included around €3.8 billion from the Government’s Employment Wage Subsidy Scheme which was paid to employers and then to the workers affected by the pandemic.
Income
However, the CSO cautioned that the rise in disposable income was very unevenly spread, with many workers, particularly those in hospitality, retail and other sectors badly hit by the pandemic, suffering a financial reversal.
Private sector debt fell during 2020 to stand at €704.5 billion. This was due to declines in the debt of both non-financial corporations, and households and non-profits.
At 189 per cent of GDP (gross domestic product), the private sector debt to GDP ratio continued to exceed the threshold of 133 per cent of GDP set as part of the EU’s macroeconomic imbalance procedure, which aims to identify risky levels of debt.
The pandemic restrictions that produced higher savings for households also led to an 8 per cent decline in profits for Irish-owned companies, with those in travel and hospitality hardest hit, the figures show.
At the same time the foreign multinationals here, which are mainly in technology and pharmaceuticals, saw profit growth of 12 per cent in their Irish operations.
