Irish households saved over €31bn in 2020

Irish households saved over €31bn in 2020

The majority of the money saved is sitting on deposit with banks, according to the CSO. Picture: Pexels

Irish households saved over €31bn last year, bringing their total financial worth to an all-time high of €312.8bn, according to new figures from the Central Statistics Office (CSO).

The CSO’s Institutional Sector Accounts Non-Financial and Financial Report for 2020 shows that the level of saving by households last year was almost three times higher than before the onset of the Covid-19 pandemic.

The majority of the money saved is sitting on deposit with banks.

The CSO's report also noted that incomes for those who were able to continue to work throughout Covid-19 restrictions rose on average, and that an €8.8bn Government intervention mitigated the decline in incomes of those who were out of work because of the pandemic.

The extra savings generated propelled the overall financial net worth of Irish households to a massive €312bn.

The biggest additional area for asset growth was deposits, which amounted to €16bn last year — a total higher even than the €12bn added in 2006 during the height of the use of Special Saving Incentive Accounts (SSIAs).

Aside from deposits, the CSO said much of these savings were put toward paying off debts, adding to pension funds, and buying more ‘real assets’ like new homes.

While the pandemic saw households savings increase significantly, Irish-owned companies saw their profits decline 8% last year, with the travel and hospitality sectors hardest hit.

Conversely, foreign multi-national companies operating here, mainly technology and pharmaceutical firms, saw their profits increase by 12%.

Debt and GDP

Elsewhere, the CSO report shows that the additional financial supports provided to households, and additional spending on services, drove the government deficit to €18bn last year.

The report notes that this is far below the peak of €54bn recorded during the financial crisis, but well above the Maastricht threshold of 3% of gross domestic product (GDP).

Private sector debt decreased during 2020 and stood at €704.5bn by the end of the year. 

This equates to roughly 189% of GDP, which CSO Statistician Peter Culhane says is likely due to declines in the debt of both non-financial corporations, households and non-profits.

"At 189% of GDP, the private sector debt to GDP ratio continued to exceed the threshold of 133% of GDP set as part of the Macroeconomic Imbalance Procedure, mostly due to the activity of foreign-owned non-financial corporations," he said.

Balance sheets of financial corporations grew last year, rising above €6.5 trillion, of which €5.2 trillion was held in the rest of the world. 

According to the CSO, this growth was largely driven by 'Non-Money Market Funds', which are open-ended and closed-ended investment funds, real estate investment funds, and hedge funds.

In 2020, the gross government debt to GDP ratio increased to 58.4%, staying just below the European Union's 60% imbalance threshold.

"Ireland's globalised economy complicates some of the common economic indicators, like GDP and private sector debt. The impact of the pandemic in 2020 also makes the usual headline indicators less meaningful," Mr Culhane said. 

"These statistics in the sector accounts provide a richer picture which analysts can use to delve more deeply into the structure and trends in the economy.”

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From florist to fraudster, leaving a trail of destruction from North Cork, to Waterford, to Clare, to Wexford and through the midlands ... learn how mistress of re-invention, Catherine O'Brien, scammed her way around rural Ireland.

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