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Savings increased during December's Omicron wave

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Savings declined in November as people prepared for Christmas. Photo: Arthur Carron

Savings declined in November as people prepared for Christmas. Photo: Arthur Carron

Savings declined in November as people prepared for Christmas. Photo: Arthur Carron

Irish households went back into saving mode in December, almost completely reversing their pre-Christmas spending splurge from the month before.

Household deposits increased by €1.3bn in the last month of 2021 compared with a €1.4bn outflow in November, according to new statistics from the Central Bank.

Net lending to businesses also fell in the month, with the spread of the Omicron variant adding to economic uncertainty as the year came to a close.

Household deposits stood at over €136bn at the end of 2021, increasing by almost €11.3bn over the year.

The four-year trend in savings accumulation, which accelerated during the pandemic, appears to have resumed for the moment, despite a significant interruption in November when household deposits fell by the largest amount since 2010.

Deposits ended the year 9.1pc up on 2020, which the Central Bank said was a sign the trend was “stabilising” after a recent peak earlier in the year, when deposit growth approached 15pc annually.

Overnight deposits, which include current accounts, continue to be the driver of the annual increases in household deposits, the Central Bank said.

Consumer lending also backtracked in December, with a net decrease of €74m in the month as repayments exceeded drawdowns for the first time since April.

That result pulled down annual growth in loans for consumption into negative territory by €37m, or 0.3pc.

Mortgage lending moved in the other direction, however.

Loans for house purchase increased in net terms by €657m in the final quarter of 2021 compared with a net increase of €589m in Q4 2020.

The strength of the mortgage market, which ended the year at €10.5bn according to the Banking and Payments Federation of Ireland, was enough to push overall net lending €272m higher year-on-year in December.

Meanwhile, business borrowing was flat on the year, decreasing by a nearly negligible 0.1pc. That was still an improvement on 2020, when net lending to businesses fell 4.6pc as part of a decade-long deleveraging trend.

December alone saw a net reduction of €192m in loans to non-financial corporations.

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On the other side of the ledger, deposits by businesses grew €3bn in December, closing the year €9.2bn higher for an annual growth rate of €13.2pc.

That was nonetheless a less dramatic increase in savings than during 2020, when businesses grew deposits by 18.5pc.


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