It is hard to imagine that in the middle of a genuine cost-of-living crunch and a housing crisis, Irish people as a whole are saving €1 for every €4 they spend.
Yet new CSO figures are showing exactly that.
Irish households put aside €3.9bn in the last three months of 2022, which was equal to 20pc of total disposable income.
This news will come as little comfort to the 23pc of the population reported to be struggling with basic bills, and grappling with food prices that have been rising at a rate of 16pc per year.
This could simply be a symptom of the rich getting richer
Nevertheless, we should take some comfort from the fact that so many people are not over-spending.
Firstly, back at the height of the Celtic Tiger boom in 2006, the savings rate was only about 5pc.
A savings rate above 20pc suggests the nation as a whole is not as heavily borrowed, and is better-cushioned in the event of a downturn.
The problem is we don’t have any breakdown of how households are achieving that rate of savings, or what regional differences or age differences apply. This could simply be a symptom of an uneven distribution of wealth – the rich getting richer.
Back in 2006 before the crash, total household debt was 200pc of national disposable income. Now it is less than 100pc – which augurs well for avoiding a major property crash again, as household debt looks more affordable.
However, there are downsides to the picture this figure portrays.
It shows how wasteful so many government supports have been – by not distinguishing between those who need them and those who don’t.
If some people are managing to save at this rate, they clearly are not in need of electricity bill credits. On the other hand there are some very hard-pressed families that could do with more help.
It also brings into the focus issues like child allowance payments – which have no income cut-off and are not means tested. This figure highlights the scale of the free money the State hands to people who don’t need it.
One other aspect to these figures is that they show how Irish people in general learned the lessons of the boom/bust of the noughties. They are no longer as overextended with debt, and have retained financial cushions where they can – either to buy their first house or save for a rainy day.
The banks too have learned their lessons from the crash, as have the regulators.
Politicians on the other hand have failed to grasp the economic, political and social value of having affordable places to live. The penny still hasn’t dropped in Government Buildings on that one.
Cost of state borrowing is rising – but no need to panic
The NTMA borrowed money last week at the highest interest rate in nine years. The agency sold €800m of bonds at a rate of 3.37pc.
It seems a lot compared to the practically free money that was available up until about a year ago, before the markets turned and ECB rates started to rise.
It isn’t a cause for panic in the affordability stakes. A rate of 3.37pc is still quite low over the long-term run of things – the worry comes more from how quickly this market can change.
Just ask Liz Truss and Kwasi Kwarteng. Their disastrous budget last September saw UK sovereign bond yields rise to over 5pc in a matter of days.
At a rate of 3.37pc, Irish borrowing is still cheaper than the UK – where the rate has stabilised – but it is rising.
The yield on 10-year UK gilts is running at around 3.84pc, compared to 1.28pc a year ago.
The Irish rate is slightly above that of France (which is at 3.2pc) but marginally below Canada’s (at 3.4pc). German 10-year bond yields a year ago were 0.02pc and are now 2.7pc. The rate for the US is 4.02pc, compared to 1.87pc a year ago. Italy has gone from 1.5pc to 4.5pc.
The NTMA has only one big bond due for repayment this year which is for €7bn. It has estimated its funding requirement for 2023 at between €7bn and €11bn. This is a pretty conservative estimate, given that the Exchequer expects to be in surplus this year and the Central Bank believes the margin of income over spending could be as much as €8bn.
The NTMA is also sitting on a cash pile of €23bn from previous fundraisings. They really did fill their boots when the money was practically going for free!
Michael Palin and John Cleese in the dead parrot sketch from 'Monty Python'
Free bus fare row is Monty Pythonesque
How much is it worth to the State to have many more people use public transport? If they could pull it off, it would be good for private transport carriers, good for CIÉ group companies, and good for the environment.
But the row that has erupted over giving out free transport to people to get them out of their cars has been somewhat comical. Everything must be about ideology these days.
Debates about whether cyclists might switch to free public transport and therefore not reduce emissions is a bit Monty Pythonesque.
In 2021, CIÉ group companies (which include Bus Éireann, Irish Rail and Dublin Bus) received the vast bulk of their income from the State, either through direct subvention or public service contracts.
Free transport for a month would cost CIÉ around €44m
The non-state part of revenue was about €455m, which left a further €842m coming directly or indirectly from the State. Public transport usage has not bounced back fully from Covid, especially when it comes to rail journeys.
Figures for 2021, when Covid was an obstacle but not as bad as 2020, show the slow recovery.
In 2019 before the pandemic, Dublin Bus had 142m passenger journeys. In 2021 it was just 70m. Irish Rail had 50.2m passenger journeys in 2019 and 17.4m in 2021. Bus Éireann recorded 89m in 2019 and 57.5m in 2021.
It has been suggested that CIÉ companies could offer free public transport for a period of time, even a month, to show people the alternatives to cars.
But it would have to extend to private transport operators too, as they would be materially disadvantaged when it comes to Bus Éireann and some Dublin routes.
Free transport for a month would cost CIÉ around €44m. And it would be an expensive month, accompanied by a pricey marketing campaign.
Slashing fares for CIÉ companies by 70pc would cost around €30m. If it made a meaningful difference, this might be worth considering. The cost is high – but compared to the €842m that went into group companies in 2021, it is manageable.
Also, compared to CIÉ’s €845m pension fund deficit at the end of 2021, it’s small beer. Pension costs at CIÉ companies have increased, and in 2021 were €112m (compared to €96m in 2020). Some of this is non-cash accounting costs, some is the direct cash cost.
Despite these costs being carried by the companies, the pension deficit is a staggering €845m. That hole will have to be filled some day.
