Irish households saved more than €10bn in first quarter of year

Level of savings four times higher than normal, according to Central Statistics Office

Consumers’ inability to spend money on activities such as dining out in the first quarter helped boost savings rates. Photograph: iStock

Consumers’ inability to spend money on activities such as dining out in the first quarter helped boost savings rates. Photograph: iStock

 

Irish households saved more than €10 billion in the first quarter of 2021 – four times the amount usually saved in that period of the year, according to the Central Statistics Office (CSO).

The high level of saving was due to incomes either holding up or increasing at a time when opportunities to spend money were limited by economic restrictions designed to stop the spread of Covid-19.

The CSO said uncertainty about the trajectory of the pandemic may also have encouraged a greater degree of precautionary savings as consumers stored up money in anticipation that their finances would tighten in the future.

Some savings also went into pension funds or were used to pay off mortgages and other loans. Capital investment in new housing and improvement to dwellings was largely unchanged compared to the same period in 2020, which the CSO said was perhaps because of restrictions on construction activity.

The household savings ratio of 31 per cent compares to a ratio of 25.8 per cent in the final quarter of 2020.

Incomes

Government subsidies rose €1.1 billion and social protection payments grew by €2.7 billion compared to the first quarter of 2020.

Although the median income for those receiving the Pandemic Unemployment Payment declined compared to their income when working, this drop in income was offset across the population as a whole by higher median incomes for those in work.

The total wage bill in some parts of the economy – such as finance, IT and the public sector – rose due to higher earnings per week and more people being employed in those sectors.

Even after higher taxes and social contributions are taken into account, overall gross disposable income rose.

The largest proportion of the extra saving was added to deposits in Irish banks and most of these deposits are available immediately to households to use as restrictions ease.