Institutional Sector Accounts Non-Financial Quarter 2 2023

Government (S.13)

The government surplus (net lending, B.9) was €2,301m in the second quarter of 2023. This was a €954m improvement on net lending of €1,347m in the equivalent quarter of 2022. The improved position this quarter was due largely to increased revenues.

On the income side, revenue from taxation was up due to higher earnings, and higher profits in the economy as a whole. Taxes on income and wealth (D.5), which include income tax (PAYE) and corporation tax went from €14.5bn to €15.5bn when we compare the second quarter of 2022. There was also an increase in VAT-type taxes on products (D.2) of €0.4bn.

On the expenditure side, social protection payments were €7.6bn in the quarter, an increase of €638m (9%) on the equivalent quarter of 2022. The payments introduced to deal with the increase in the cost of living were lower in April to June 2023 than in the equivalent quarter of last year, so net Other Transfers (D.7) were -€617m, compared to -€1,202m in the second quarter of last year.

Non-Financial Corporations (S.11)

The Gross Value Added (GVA, B.1g) of Non-Financial Corporations, which drives Ireland's GDP, was 4% (€3.3bn) higher in the second quarter of 2023 compared to the equivalent quarter last year (see table below). The growth in GVA by activity is illustrated in Figure 2.2. The largest absolute rise was in the Information and Communication sector (+€1.43bn) The domestically-focused Distribution, Transport, Hotels and Restaurants also saw significant growth in value added over the second quarter of 2022 (+€1.17bn). Arts, Entertainment & Other Services had lower GVA than Q2 2022 (-€0.07bn).

The €5.4bn growth in GVA included an increase of €1.8bn in pay to workers (D.1) and €1.3bn in profit (B.2A3G). Non-Financial Corporations then received investment income from their subsidiaries and other assets, which amounted to €15.9bn in the quarter, a significant increase (35%) on the €11.8bn received last quarter. This led to a €5bn (18%) increase the gross saving (B.8g) of the sector from €30.4bn to €35.8bn. 

Financial Corporations (S.12)

Financial corporations (S.12) had €4.8bn GVA in the second quarter of 2023, a 12% increase on the same quarter of 2022. There was an increase of €204m (8%) in pay to workers in the sector, and profit (B.2A3G) was €276m (15%) up.

In this sector, the investment income (D.4) resources (received) and uses (paid), are much larger than the value added, and have a bigger impact on the saving (B.8G) and net lending (B.9). The flows of this investment income, both in and out, grew by more than a third in the year since Q2 2022 with investment income received reaching €45.7bn. These increases reflect higher interest rates by central banks: for example, at the end of Q2 2022 the European Central Bank's Deposit Facility rate was -0.5%, while at the end of Q2 2023 it was 3.5%. As the growth in inflows to financial corporations was slightly larger than the increase in outflows, the sector went from being a net borrower to a net lender: it was a net lender of €183m in the second quarter of this year, compared to net borrowing of €670m in the equivalent quarter of last year, a change of €852m.

As we can see from International Accounts Table 1.5, the investment income (primary income) is mostly paid and received by Other Financial Intermediaries, such as non-pension investment funds, and most of this is paid to, and received from, the rest of the world. Thus, while the value of transactions are very high in the sub-sector, they have limited impact on the domestic economy. Further details are given in the International Accounts.