Monday 17 June 2019

Households now 60pc richer than a year ago as we rein in borrowing

Peter Flanagan


is the net wealth of Irish households

IRISH households are nearly 60pc richer than a year ago, according to the Central Bank.

The first-ever quarterly financial accounts (QFAs) for the country show that between the first quarter of 2009 and the same period this year, the net financial wealth of Irish households increased 58pc to €95.3bn.

That is still some way off the peak of 2006 but is a huge improvement on the trough of early 2009.

The bank said that the increase had been driven by the recovery in the stock market, following the worst of the financial crisis; and families reining in their borrowings, while concentrating on loan repayments and reducing their liabilities overall.

The QFAs also found that households have been net savers since the first three months of 2009. That has been compounded by declining consumption levels overall and reduced housing investment.

The net financial wealth of households was calculated using financial assets less liabilities. The calculation excludes housing and other non-financial assets. The QFAs also calculated the economic activity of corporations and the Government. The accounts were backdated to the start of 2002.

According to the report, the capital injections to Anglo Irish Bank and Irish Nationwide earlier this year of some €11bn, combined with an increase in the number of bonds the country issued, led to an increase in government liabilities of about 17pc in the first quarter of the year. As a result of the increase in liabilities, which have been growing steadily since the end of 2007, the reserve bank said that short-term bonds are becoming more and more important to fund government expenses.

The €12.3bn total capital injections to Anglo in the six months between September last year and March this year have directly impacted on the government deficit. However, due to the way the Government accounted for the €2.7bn transferred to Irish Nationwide, it has not affected the deficit.

Businesses have suffered greatly during the recession and the wealth of non-financial institutions has suffered accordingly, and in the eight years the QFAs cover, net financial wealth has gone from minus €100bn to minus €200bn.

Irish Independent

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