Irish piggy banks fit to burst with €28bn put away in 2020

IRISH peoples’ piggy banks are fit to burst – despite the pandemic.

SAVINGS by Irish households doubled to €28billion at the end of last year as rolling lockdowns forced families to spend less.

Households also saved more amid fears of tightening finances in the future. The CSO said that there was a shape spike in savings levels in the fourth quarter of 2020, despite the rise in unemployment.

In total, households saved €28billion last year, compared to €14billion the previous year. This is a change from saving 12% of total disposable income to saving 23% of it. The CSO gave two reasons for this: lower consumer spending, and higher income. Most families used this extra cash to pay off their mortgage and other loans or added it to their overall household savings in the bank. Savings also went into pension funds and into home improvement.

More surprising is that in a pandemic year when large numbers of people were out of work, household disposable income actually rose slightly.

This rise in joblessness did not bring down overall income for two reasons. First, the Government stepped in with the Pandemic Unemployment Payment and the Temporary Wage Subsidy Scheme. While the average income for those receiving the PUP did decline compared to income when working, the decline was offset by higher average incomes for those still in work. The CSO data reveals that the total wage bill in large parts of the economy such as industry, finance, IT, and public service rose due to higher earnings per week and more people being employed in those sectors.

After lower taxes and social contributions are taken into account, as well as other income sources, overall total disposable income rose.

And, while the last quarter of the year usually sees families splurge more due to Christmas, spending actually decreased by 3% in the final quarter.