Financial sector loses some importance in overall economy

The State's financial sector has become a less important part of the economy since 2010, a review from the Central Statistics Office (CSO) shows.

In its evaluation of the importance of the financial sector to the economy, the CSO found that the share of the sector has fallen more than 3 per cent since 2010. However, the absolute size of the sector has increased since 2015 in tandem with an overall economic growth.

In 2016, the sector contributed around €17.3 billion to the economy, comprising 9.17 per cent of our modified gross national income (GNI*). The GNI* measure designed to provide an accurate picture of growth without skewing factors such as the impact of huge aircraft leasing assets.

The CSO’s review found that the balance sheet of finance corporations grew significantly since 2013, with assets of investment funds driving most of the €176 billion increase in 2016.

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Between 2008 and 2016 the balance sheet of investment funds increased five fold to €1.9 trillion. Equity and investment fund shares as well as debt securities comprise around 83 per cent of the total balance sheet of investment funds.

Banks and other deposit-taking organisations, on the other hand, have seen the size of their balance sheets contract consistently since 2008. Between 2008 and 2016 the total financial assets of the sector fell from €1.45 trillion to €570 billion.

Value added

While the value the sector added to the economy had been contracting since the recession, that turned around in 2014 with the sector contributing a value of €17.35 billion to the total gross domestic product in 2016.

With the Government – a majority shareholder in two of the State’s three pillar banks – opposing executive pay increases, compensation in the sector has remained constant, hovering around the €6 billion to €6.5 billion range.

Net taxes paid fell markedly to €30 million in 2010 but have recovered since.

In 2016, the sector employed 95,000 people. It had assets of €4.8 trillion, with the investment fund sector accounting for 40 per cent of the breakdown of assets. The Central Bank, meanwhile, accounted for only 2 per cent.