The biggest increase in household savings since records began was recorded last month as consumers stop spending during the Covid-19 lockdown.
New figures from the Central Bank show deposits rose by €3 billion in April, the largest increase seen since the financial regulator began collating data in 2003.
In annual terms, deposits were €9.7 billion higher than withdrawals, representing a 9.1 per cent rise over the year.
The data shows consumer lending was also significantly impacted by the coronavirus crisis, with a €277 million decline in April, the largest monthly fall since early 2014.
Loans for house purchases fell by €73 million over the month while repayments on lending for consumption and buying property fell by a quarter.
EY chief economist Neil Gibson forecast an increase of between €8 billion and €10 billion in savings deposits by the end of 2020.
“The record increase in savings not only tells us that people’s ability to spend has been constrained by the Covid-19 lockdown but also that the range of Government support available has helped to protect incomes,” he said.
He estimated that encouraging consumers to start spending again will be critical to driving economic recovery.
“In a sense the consumer will need to pick up the baton when the Government has to rein back its unprecedented support. This will not be easy,” he said.
“Increasing unemployment levels will create a degree of fear and anxiety that will potentially lead to a greater to desire to save than to spend. Social distancing rules may also further restrict people’s spending ability,” Mr Gibson added.
Deposits from non-financial corporations rose by €1.2 billion during the month, which the Central Bank said may highlight an increased focused on cash management during the pandemic.
Net lending to such corporations totalled €1.5 billion in April, the figures show.