Irish households saved twice as much in 2020 compared to the previous year according to new figures from the Central Statistics Office (CSO), totaling 28 billion euros, roughly equivalent to domestic product gross (GDP) of Latvia.
According to 2020 estimates from the International Monetary Fund, Latvia’s GDP stood at $ 33 billion (€ 28 billion) last year, while the level of Irish household savings also exceeded the country’s GDP. like Estonia, Iceland and Cyprus.
The figure of 28 billion euros would also be enough to cover the median annual disposable income (43,552 €) for 642,909 households, based on 2019 figures from the CSO.
The increase in the amount of money saved is explained by a large percentage increase in the level of disposable income set aside, which nearly doubled during the year from 12% to 23%.
The CSO notes that this increase in savings was largely driven by decreasing spending opportunities for consumers due to Covid-19 restrictions, but also due to “precautionary savings”, as households anticipated a possible financial tightening in the future.
Despite an increase in unemployment rates, the gross disposable income of households also increased slightly in 2020.
Up to 100,000 workers facing long-term unemployment …
The introduction of support payments from the government, such as the Pandemic Unemployment Benefit (PUP) and the Wage Subsidy Program for Employment (EWSS), has been a factor in this regard, associated the higher median income of those who were able to continue working throughout the pandemic.
CSO data shows that most of the 28 billion euros saved by households last year went to savings accounts, while the additional funds also went to pension funds and repayment of mortgages and other loans.
Overall, the economy grew in 2020, mainly due to the higher gross value added of non-financial corporations, with manufacturing industry or information and communications companies accounting for a large part of the increase.
CSO figures also show that government borrowing has reached its highest levels since 2011.