Institutional Sector Accounts Non-Financial and Financial 2017

Overall, household actual gross disposable income increased from €97.4m in 2016 to €103.3bn in 2017, an increase of €5.9bn. At the same time household final expenditure on goods and services (P.3) increased by €2.7bn from €89.5bn in 2016 to €92.2bn in 2017. As a result the gross saving of households (B.8g) grew from €7.9bn in 2016 to €11.1bn in 2017. Expressed as a percentage of actual gross disposable income the corresponding gross saving ratio was 8.1% in 2016 and 10.8% in 2017. Figure 1.2 shows actual gross disposable income, final expenditure on goods and services and the saving ratio for the household sector for the period 2010 – 2017. While there are clear upward trends in both income and expenditure since 2012, the saving ratio has been volatile in recent years. Also included in Figure 1.2 is the EU saving ratio, which is close to the Irish value in 2017.

Household and NPISH Debt

The balance sheet position in relation to household and NPISH debt (Table 2.4 Liabilities – AF.4 Loans) continued to decrease from €143bn in 2016 to €140bn in 2017 as mortgages continued to be paid off faster than new ones were taken out. The resulting debt to income ratio for this sector, which measures the sustainability of household debt, decreased from a peak of 209% in 2009 to 133% in 2017, around the same level as 2003. 

Figure 1.3 charts the movement in these series for the period 2001 to 2017.

Use of Household and NPISH Saving

Gross household and NPISH saving (B.8g) climbed to €11.4bn in 2017 from a low of €7.3bn in 2014. The use of saving in this sector is dominated by capital investment in dwellings and related financial transactions in loans and deposits. How households and NPISH have been using their saving is illustrated in Figure 1.4 below. The line graph is the trend in actual gross household saving while the bar chart illustrates transactions in investment and borrowing by households and NPISH.¹

Repayment of loans (or deleveraging), amounted to €2.2bn in 2017 (Table 2.2 - Liabilities F.4). Repayments exceeded new borrowing in each of the last nine years, but the rate of deleveraging has been declining. Investment in fixed capital formation since 2009 is at a level that can be financed by collective household saving without having recourse to borrowing. Gross capital formation stood at €5.8bn in 2017, the fourth successive year of increase (but well below the 2006 peak of €25.8bn). The use of household saving to fund additional deposits of €4.1bn (Table 2.1 – Assets F.2) and investment in insurance and pension funds of €2.9bn (Table 2.1 – Assets F.6) is also apparent from the graph.

Non-Profit Institutions Serving Households

Non-profit institutions serving households include charities for those in need, sports clubs and religious bodies. This sector excludes non-profits that are largely financed and controlled by government (such as schools and hospitals).² The institutions in the NPISH sector get most of their income as transfers from households (for example, donations, church collections, union dues or members' subscriptions) and also receive some transfers from government. Relatively little of their income is from investments. Their income is spent on final consumption expenditure and compensation of employees in a roughly 3:1 ratio. As their income is almost all returned to households, there is relatively little net difference in the saving rate between S.1M and S.14 on its own. The main items of NPISH income and expenditure are illustrated in the bar chart in Figure 1.5. The line graph represents the gross saving of the sector, out of which investment is funded.

¹It is important to make the distinction between balance sheet measures of household debt, i.e. the outstanding stock of loans illustrated in Figure 1.3 and transactions in loans, i.e. increases (+) or decreases (-) included in Figure 1.4.

²Many charities, such as hospitals and social care providers, which receive most of their funding from government and which provide services under contract with government, are treated as part of the government sector (S.13) in national accounts, and not S.15. See the Register of Public Sector Bodies (PDF 595KB) .