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Last year, massive unemployment left households better off, and excess savings means we’ve never been richer.
New data from the Central Bank shows that Irish households saw a 1 billion euro reduction in wages in the three months to the end of September 2020, even before the second lockdown hit.
However, the same data shows that the drop in wages was more than equaled, in aggregate terms, by a € 2.9 billion increase in social transfers, including pandemic unemployment payments and wage subsidies.
Central Bank data also record a 1.3 billion euro drop in consumption in the period, as nervous citizens spent less, although that trend seems to contrast somewhat with figures from the Central Statistics Office (CSO) of the last week they showed strong retail spending late last year.
Income support, debt relief, and spending cuts combined to leave households better off, on average with an increase in household disposable income recorded during the quarter.
A large accumulation of savings, including money on deposit and in pension and insurance plans, plus a small increase in house prices combined with lower debt, meant that the latest data from the Central Bank shows that the net worth of households increased by 1.7% to an all-time high of € 831 billion in the third quarter of last year.
This equates to € 166,932 per person in the country, although the Bank goes to great lengths to point out that this document number may not match people’s real world experience.
Still, the rise in household wealth last year is a dramatic change from the global financial crisis that triggered a dramatic drop in household wealth as incomes collapsed and house prices plummeted as the debt remained high.
On this occasion, household savings increased by 570 million euros in the three months to the end of last September, to stand at 6,400 million euros, while private sector debt levels have fallen.
However, as the State regained economic comfort, public debt increased by 3.7 billion euros to stand at 255 billion euros, a record.
Online editors
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