Irish household deposits remain elevated after Covid crisis

Irish households are heavily reliant on deposits, with relatively smaller participation rates in other financial assets, said the Central Bank.

Irish household bank deposits remain at an elevated level of over €140bn despite end of the Covid crisis, according to Central Bank research.

Irish deposit growth has eased back to pre-pandemic rates. By the end of May, the total Irish household deposits of €144bn were 30% higher than at the onset of the pandemic.

The Central Bank said if deposits continued to grow at 2019 rates over 2020 and 2021, total deposits would have been roughly €16bn less.

Higher real income growth, reduced spending and precautionary savings contributed to a significant increase in Irish household deposits during the pandemic.

Irish households are heavily reliant on deposits, with relatively smaller participation rates in other financial assets, said the Central Bank.

Deposit growth is evident across Europe. All euro area countries recorded higher deposit growth relative to 2019 and surpassing pre-pandemic averages. Irish household deposit growth was among the highest in the euro area.

Higher costs of living is reducing real income in Ireland, said the regulator. Inflation and lower economic growth could reduce the existing deposit stock and constrain future savings capacity, said the Central Bank.

Earlier this year, other economists estimated the level of excess savings at one stage during the pandemic reached between €7bn and €8bn.