Quarterly Financial Accounts

The Quarterly Financial Accounts (QFA) present a complete and consistent set of quarterly financial data for all sectors of the Irish economy. They provide comprehensive information on the financial and investment activities of households, non-financial corporations, financial corporations, government and the rest of the world. The whom-to-whom tables provide information on the interactions between these sectors.

Key Points – Q3 2022

Publication date: 09 February 2023

• Households’ net wealth grew by €29bn to reach a series high of €1,053bn in Q3 2022.
• The rise in net wealth was primarily driven by the increasing value of housing assets, which reached an all-time high of €700bn, above its previous peak last quarter.
• Financial net worth of households marginally increased in the period, now totalling €352bn. This is due to new investment during the quarter, offsetting adverse revaluations of financial instruments.

Chart 1: Household Net Worth

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Household net wealth rose by €29bn to stand at €1,053bn in Q3 2022. However, it should be noted that this increase in aggregate household wealth does not capture distribution effects across the sector.

The increase was primarily driven by growth in the value of housing assets. Investment in new housing totalled €2.7bn, while revaluations of existing residential properties were equal to €25bn in the quarter. Total housing wealth held by Irish households surpassed €700bn for the first time in the series.

In Q3 2022, housing assets represented 67 per cent of total household net worth. This ratio is below the all-time high of 88 per cent in Q4 2008, but has been steadily increasing since Q2 2021.

Households’ financial wealth increased by €1.6bn in the period, due to the combined effect of new investment in financial assets, a marginal decrease in financial liabilities and negative revaluations. As a result, total financial net wealth reached €352bn in Q3 2022.

Chart 2: Breakdown of Household Net Wealth, Q-on-Q changes

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During the quarter, new investment by households in financial assets totalled €4.6bn. It primarily relates to an increase in currency and deposits (€2.8bn), pension funds entitlements (€1.2bn) and insurance instruments (€0.6bn). Marginal reductions in financial liabilities can be attributed to a decrease in the amount of long-term loans of Irish households.

For the third consecutive quarter revaluations of financial instruments have negatively affected households, albeit to a smaller magnitude (€3.3bn) compared to the preceding two periods. Adverse revaluations of pension entitlements of €8.5bn were partially offset by positive changes in insurance instruments and unlisted equity.

Chart 3: Household Savings

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Savings in the period totalled €7bn in Q3 2022, decreasing for the fourth consecutive quarter to date. Investment in new housing and acquisition of financial assets (primarily increasing currency and deposit holdings) were the main components of this movement.

Disposable income of Irish households grew marginally during the quarter. While increased employment and wages across several sectors contributed to nominal growth, a rise in the Consumer Price Index in Q3 2022 caused a deterioration in real terms.

Chart 4: Private Sector Debt-to-GDP

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Private sector debt rose by €29bn during the quarter, to stand at €895bn. This increase was driven by the growth in the stock of non-financial corporations’ debt (while households’ debt level remained unchanged from the previous quarter). However, higher GDP growth caused the private sector debt-to-GDP ratio to decrease by 1 percentage point, to reach 186 per cent.

Private sector debt in Ireland is significantly influenced by the presence of large multinational enterprises (MNEs) and restructuring by these entities has resulted in extremely large movements in Irish private sector debt, particularly from 2014 onwards. Private sector indebtedness forms part of the European Commission’s scoreboard of macroeconomic imbalances. The Commission sets an indicative threshold of 160 per cent of GDP for private sector debt sustainability. However, this threshold does not take account of the large MNEs sector in Ireland.

Chart 5: Government Debt

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Irish government debt decreased by €7.5bn in the quarter, to stand at €231bn in Q3 2022. This was primarily driven by a reduction in long-term securities. Short-term debt securities also declined relative to the previous quarter, while the amount of total loans remained unchanged.

Chart 5 also shows that Quarterly Government Debt (QGD), which is based on the Excessive Deficit Procedure (EDP) measure of debt, marginally decreased by €0.5bn in the period, to reach €236bn.

In terms of net wealth, government financial assets slightly declined by €0.7bn during the quarter, while total liabilities also decreased by €7.6bn in the period. As a result, the (negative) net financial wealth of the Irish government continued its steady improvement since Q1 2021, reaching €141bn in Q3 2022.

Chart 6: Net Lending/Borrowing

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The domestic economy remained a net lender in Q3 2022, with acquisitions of assets surpassing liabilities by €17bn. The total net lending figure declined for the third consecutive quarter.

All sectors of the economy remained net lenders with the exception of non-financial corporations, which saw a total net borrowing position equal to -€2.7bn in Q3 2022.

Net lending by financial corporations totalled €14bn in the quarter (primarily driven by the lending position of the “Other Financial Institutions” sub-sector) while Irish households remained net lenders in Q3 2022, and have been continuously since 2009.

Data