Ireland’s debt equates to €47,000 for every man, woman and child

The State's national debt rose to €236.3 billion in the third quarter of last year, up from €227 billion 12 months earlier, as spending on wage and other pandemic-related supports continued to weigh on public finances, according to the Central Statistics Office (CSO).

This equates to €47,144 for every individual in the State, and €95,607 per worker.

Even with the rapid turnaround in employment and growth, Ireland still has one of the highest per capita debt levels in the world, leaving the economy here more vulnerable to shocks.

The Department of Finance’s chief economist, John McCarthy, has warned that the Irish economy is in a “finely balanced position”, and that budgetary policy would have “to walk a fine line” between supporting the economy and ensuring fiscal sustainability.

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The State’s national debt would have to be refinanced in the coming years potentially at higher borrowing rates, he said, while market sentiment towards Ireland, which remains positive, could change rapidly.

The €236 billion debt figure was 57.6 per cent of gross domestic product (GDP), down from 61.2 per cent at the end of the same quarter in 2020.

The reduction in the debt ratio was driven entirely by the increase in GDP: the overall debt was up by €9.1 billion in the same period.

Tax revenues

The CSO figures also show the Government’s budget deficit – the difference between what it spends and what it takes in in taxes – was €2.9 billion in the quarter. This represented an improvement on the €3.6 billion for the same quarter in 2020, driven primarily by an increase in tax revenues.

The Government’s year-end budget deficit is expected to be under €10 billion this year compared to the expectation of €20 billion at the start of the year.

Expenditure on Covid-19 measures during the quarter amounted to €2.6 billion, which was €1.7 billion less than in the same period of 2020. The reduction was mainly due to lower spending on the Pandemic Unemployment Payment (PUP), which fell to €600 million as restrictions continued to ease throughout the quarter.

Following the reintroduction of restrictions on December 7th last, however, the Government was forced to reopen the PUP scheme, which had been closed to new entrants. The rise in PUP registrations was the main driver of the increased unemployment rate in December, which passed 7 per cent.