This release has been compiled during the COVID-19 crisis. The results contained in this release reflect some of the economic impacts of the COVID-19 situation. For further information see our Information Note.
The government surplus (net lending, B.9) was €2.4bn in the third quarter of 2022. This was a €4.8bn improvement on net borrowing of €2.4bn in the equivalent quarter of 2021. The improved position this quarter was due to both increased revenues and lower expenditure.
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) went from €9.2bn to €12.7bn when we compare the third quarter of the previous year, as households paid €0.8bn more income tax and companies paid €2.7bn more corporation tax.
On the expenditure side, the supports to households that had been introduced during COVID-19 were absent in Q3 2022. As the Employment Wage Subsidy Scheme was phased out, subsidies (D.3) went from €1.8bn in this period of 2021 to €0.5bn, this quarter, which is similar to their pre-pandemic level. Social transfers (D.62) fell only marginally: while the Pandemic Unemployment Payment was no longer being paid in the July to September period of 2022, new payments were introduced to deal with the increase in the cost of living.
| Government balance (B.9)/quarterly GDP | |
| 2019Q1 | -2.28 |
| 2019Q2 | 1.03 |
| 2019Q3 | -1.14 |
| 2019Q4 | 4.04 |
| 2020Q1 | -4.14 |
| 2020Q2 | -7.98 |
| 2020Q3 | -6.55 |
| 2020Q4 | -1.89 |
| 2021Q1 | -6.20 |
| 2021Q2 | -2.23 |
| 2021Q3 | -2.10 |
| 2021Q4 | 3.85 |
| 2022Q1 | -0.20 |
| 2022Q2 | -0.87 |
| 2022Q3 | 1.82 |
The Gross Value Added (GVA, B.1g) of Non-Financial Corporations, which drives Ireland's GDP, was 21% (€17.8bn) higher in the third quarter of 2022 compared to the equivalent quarter last year (see table below). The growth in GVA by activity is illustrated in Figure 2.2. Most of the growth was concentrated in the MNE-dominated Industry sector (excluding Construction), which increased its GVA by €11.8bn. Professional, Administration & Support Services grew by €1.33bn, while Information & Communication was up €1.09bn compared with the third quarter of 2021. The domestic based sectors continued their recovery from COVID-19 restrictions. The Distribution, Transport, Hotels & Restaurants sector posted an increase of €1.79bn in Q3 2022 and Construction exhibited an increase of €0.68bn compared with the same quarter of 2021 while the Arts & Entertainment sector also rose and was up €0.19bn.
The €17.8bn growth in GVA included an increase of €1.7bn in pay to workers (D.1) and €14.9bn in profit (B.2A3G). Most of the additional profit then flowed out to the owners of the corporations in other countries as investment income (D.4 net €12.4bn), with an extra €2.3bn being paid to the Irish government as corporation tax (D.5). The rest (€0.2bn, B.8G) was growth in the companies' savings.
Non-financial corporations invested €48.5bn in capital assets (P.5) in the quarter, an increase of €29.4bn on the equivalent quarter of 2021. This large increase can be seen in the main Quarterly National Accounts as growth in fixed capital expenditure on Intangible Assets from €9.0bn to €35.2bn in the third quarter. The International Accounts also show a change in Research & Development imports from €8.0bn to €34.1bn in comparing the third quarter results.
This left the sector a net borrower (B.9) in the quarter of €15bn.
| Change since 2021Q3 | |
| Industry (excl. Construction) | 11.80 |
| Construction | 0.68 |
| Distribution, Transport, Hotels & Restaurants | 1.79 |
| Information & Communication | 1.09 |
| Professional, Admin & Support Services | 1.33 |
| Arts, Entertainment & Other Services | 0.19 |
Financial corporations (S.12) had €5.2bn GVA in the third quarter of 2022, a 5% increase on the same quarter of 2021. There was an increase of €215m (9%) in pay to workers in the sector, and profit (B.2A3G) was €37m (1%) 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 in the quarter. As the outflows exceeded the inflows, the sector was a net borrower of €462m in Quarter 3.
As we can see from International Accounts Table 1.5, the investment income (primary income) is mostly paid and received by Other Finanical 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.
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