The Irish economy grew in 2021, resulting in a wealthier household sector, CSO data shows.

Households added €32bn to their wealth in 2021 and continued to decrease their borrowings.

The household debt-to-income ratio fell below the ratio for the EU overall for the first time in the 21-year data series.

Household net wealth held in financial assets stood at €366bn at the end of the year, up from €318bn at the end of 2020. This is in addition to wealth held in assets such as houses.

Government net borrowing was €7bn in 2021, as it continued to respond to the pandemic, compared to €19bn in 2020. 

Assets held in Ireland by the financial sector continued to grow and reached almost €8 trillion. Private sector debt continued to decline towards the EU target threshold.

Statistician Lucia Perez Alfaro said: “Today’s release shows that households added €32bn to their wealth in 2021, compared with €34bn over all three years 2017-2019.

Increased saving

“This increased level of saving was a result of incomes increasing while spending remained suppressed owing to the pandemic. Household consumption recovered slightly in 2021, which was the second year affected by the COVID-19 pandemic, but it did not keep pace with rising household incomes, as more people were in work and wages were going up.

“Household net wealth held in financial assets stood at €366bn at the end of the year, more than three times its level 20 years ago. Indebtedness also declined as the household debt-to-income ratio fell below that of the EU overall,” she said.

Other sectors of the economy also performed strongly. Companies posted record profits in the year, yielding €13bn in corporation tax for the Irish government. Most of these profits were generated by foreign-owned multi-nationals.

The foreign-owned firms paid €31bn to their workers in 2021, or 28% of all wages and salaries, a proportion that has been increasing in recent years. While domestic firms shrank in 2020, these foreign firms continued to grow their workforce, and increased their share of the labour market.

The financial sector continued to expand, driven by growth across all financial sub-sectors, with total assets heading towards €8 trillion. The investment funds (non-money market) make up the largest part of these assets managed here; the statistician explained.