Savings by Irish households doubled to €14 billion between 2014 and 2019, new figures from the Central Statistics Office (CSO) show.
The paying down of debt held over from the 2008 financial crisis combined with rising income levels has allowed consumers to put away more money.
Additional national income and expenditure figures, released last week by the CSO, show gross savings by households rose from €7.6 billion in 2014 to €14.4 billion last year, and by 12 per cent in 2019 alone.
The data does not, however, cover the impact of the Covid-19 crisis, which has led to a further significant jump in savings. Recent Central Bank figures show bank deposits here jumped to €5.3 billion in the second quarter of 2020 which coincided with the coronavirus lockdown. That compares with just €2 billion for the same quarter last year.
Restrictions to curtail the spread of the virus reduced consumer spending in the wider economy, while the Government’s wage support schemes maintained income at or close to pre-Covid levels.
As a result households have been able to save money they would have normally spent on areas such as childcare, transport and recreational activity.
Whether they hoard or spend these savings is likely to have a big impact on the speed of recovery from the incoming recession.
The CSO figures show that the boost in savings prior to the pandemic was driven in the main by rising household incomes. Net income of households rose from €94.8 billion in 2014 to 129.2 billion in 2019 with the biggest increase – nearly €9 billion – occurring in 2019.
Increase
Rising income levels also led to a steady increase in household consumption, one of the main drivers of economic growth.
The figures show household consumption rose from €92.6 billion in 2014 to nearly €109 billion in 2019, representing an average annual growth rate of 3.3 per cent.
Economists believe consumption is a more accurate measure of domestic economic activity here given the inherent problems with traditional measures such as gross domestic product (GDP).
In 2015, the Republic’s GDP jumped 25 per cent, according to the official figures, which was derided internationally as leprechaun economics.
