Patrick Honohan: Irish household prosperity 'a lot lower than is commonly presumed'

GDP measure significantly overstates the size of the Irish economy, says former Central Bank governor

Patrick Honohan: 'When we dig into the available data in the more relevant parts of per capita income and consumption, we find that Ireland’s relative international position is somewhere between eighth and 12th in the European Union.' File picture: Laura Hutton/Photocall Ireland

Ireland is the 12th most prosperous economy in the EU 27, not its wealthiest, when a different and possibly more appropriate measure that looks at household consumption is used, according to Patrick Honohan, a former governor at the Central Bank.

His research, 'Is Ireland really the most prosperous country in Europe?', which was published by the Central Bank, confirms that GDP significantly overstates the size of the Irish economy but also shows that alternative measures developed in recent years to remove the accounting distortions caused by the multinationals could also be overstating the level of prosperity for Ireland's households.