Institutional Sector Accounts Non-Financial and Financial 2014

In overall terms household actual gross disposable income increased from €85.9bn in 2013 to €88.2bn in 2014. At the same time household final expenditure on goods and services also increased by a greater amount from €80.7bn in 2013 to €83.8bn in 2014. As a result the gross saving of households (B.8g) fell from €5.2bn in 2013 to €4.4bn in 2014. Expressed as a percentage of actual gross disposable income the corresponding gross saving ratio was 6.1 per cent in 2013 and 5 per cent in 2014.

Figure 2 shows actual gross disposable income, final expenditure on goods and services and the saving ratio for the household sector for the period 2004 - 2014. Also included in Figure 2 is the EU saving ratio.  The EU saving ratio declined from 10.9 per cent in 2013 to 10.6 per cent in 2014.  

Household debt

The balance sheet position in relation to household debt (Table 3 Liabilities – AF.4 Loans) declined from €168bn in 2013 to €158bn in 2014. The resulting household debt to income ratio, which measures the sustainability of household debt, decreased from 196 per cent in 2013 to 180 per cent in 2014. 

Figure 3 charts the movement in these series for the period 2004 to 2014.

Use of household saving

Household saving peaked at €13.2bn in 2009 and has since fallen back to €4.4bn in 2014. How households have been using their saving is illustrated in Figure 4 below. The line graph is the trend in actual gross household saving while the bar chart illustrates transactions in investment and borrowing by households¹.

During the entire period there is a clear link between transactions in loans (Liabilities F.4) and transactions in gross capital formation (GFCF) of households (P.5). The transactions in loans relate predominantly to borrowing to fund investment in property while the capital formation relates to the property investments themselves.

Since 2009 households have not been borrowing, in net terms.  At the same time investment in property has fallen to levels that can be financed by the saving of the sector without having recourse to borrowing. In fact the gross capital formation of households fell from a high of €25.9bn in 2006 to a low of €5.4bn in 2012. Household investment stood at €6.3bn in 2014.  Repayment of loans or deleveraging, amounting to €4.6bn continued to be a major use of household saving in 2014 as has disposals of shares that amounted to €3.3bn in 2014. The use of household saving to fund deposits (Table 2 – Assets F.2) and investment in insurance and pension funds (Table 2 – Assets F.6) is also apparent from the graph.