Household savings rose as recession took hold
Wednesday November 11 2009
IRISH households increased their savings rapidly last year as the recession took hold, figures from the Central Statistics Office show.
Saving hit an all-time low in 2007 at the height of the boom, with households putting away just 1.7pc of their disposable income that year, the CSO said.
That is separate from the amount borrowed for things like property purchases or consumption.
This "savings ratio" rose sharply to 4.2pc last year, bringing it back to levels seen in the late 1990s. But economists think it has risen much further this year -- probably to record highs.
"These accounts tend to underestimate the official national accounts which come out later," said Rossa White, chief economist at Davy Stockbrokers. "We reckon the savings ratio has soared to 12pc of disposable income in 2009."
The ratio rose to 7pc during the brief recession of 2001. Davys believe it will fall back to that kind of level when confidence improves, which would release around €4bn a year for consumption.
Disposable income was still rising last year, the CSO finds. It estimates that it grew by €4.4bn to €91bn during 2008.
The country continued to borrow heavily from the rest of the world, as it has been since 2005, with €9.4bn in net borrowing last year. But there was a big switch in borrowing from households to government.
- Brendan Keenan
Irish Independent
