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 – Q4 2021

Publication date: 12 May 2022

• Household net wealth increased by €38.5bn in Q4 2021, to reach a record high €995bn. It should be noted that this growth may not reflect the underlying experiences of all households, or the distribution of wealth.
• Household housing assets also reached a series high of €630bn in Q4 2021, above its previous peak of €604bn in Q4 2007. 
• Positive revaluations in housing assets represent the dominant driver of increases in net wealth in recent quarters. However, increasing deposits and upward revaluations of other financial assets have also been important sources of growth in net wealth.

Chart 1: Household Net Worth

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Household net wealth rose by €38.5bn to a reach €995bn, or €198,498 per capita, in Q4 2021 (Chart 1). However, it should be noted that this rise in aggregate household wealth does not capture the wealth distribution effects across the sector, and the underlying experiences of individual households may vary. In particular, the COVID-19 pandemic is likely to have had varying effects on the wealth of different household groups. Forthcoming research will investigate the evolution in the distribution of net wealth in recent years.

The rise in net wealth in Q4 2021 was driven by a combination of growth in financial assets (€7.3bn) and housing assets (€30.5bn). For financial assets, this was primarily due to a rise in the value of insurance and pension schemes (€5bn), and to a lesser extent increases in deposits held with credit institutions, as also shown in the Money and Banking Statistics.  However, the primary driver of growth in household net wealth was the significant increase in the value of housing assets by €30.5bn over the quarter. This rise resulted in household housing assets reaching a series high of €630bn in Q4 2021, above its previous peak of €604bn in Q4 2007. 

Increases in housing assets are primarily the result of upward revaluations in existing housing with new investment in housing (i.e. the value of new houses) representing a smaller share of the increase (Chart 2). 

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

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While revaluations in housing have been a main source of growth in net wealth in recent quarters, upward revaluations in household’s financial assets and increases in deposits have also been important contributors to rising net wealth - particularly since the initial COVID-19 shock in Q1 2020. By contrast, household liabilities have a much smaller impact on quarterly changes in net wealth.

Gross household savings declined for the third consecutive quarter in Q4 2021, falling by €1bn to stand at €6.8bn for the quarter (Chart 3). However, this is still high when compared to pre-pandemic levels. The decline in savings reflects a combination of the usual rise in consumer spending during the Christmas period and more general increases in consumer spending after adjustments for this seasonal uplift.

Chart 3: Household Savings

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The increase in financial assets of €4.4bn in Q4 2021 is mainly related to investment in currency and deposits of €3.4bn. Additionally, investment in new housing has remained steady at €1.7bn.

Private sector debt as a proportion of GDP marginally increased by 1 percentage point to stand at 198 per cent in Q4 2021 (Chart 4). However, in terms of value, there was a large increase in private sector debt, to stand at €835bn in Q4 2021, driven by an increase in NFC debt by €28bn over the quarter.

Chart 4: Private Sector Debt-to-GDP

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Consequently, the relatively smaller growth in private sector debt as a proportion of GDP is due to continued strong growth in annualised GDP. This grew by €12bn over the quarter. 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 Union (EU) 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 MNC sector in Ireland.

Chart 5: Government Debt

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In response to the Covid-19 pandemic, the government introduced measures to increase the capacity of the health sector and provide supports to businesses and households. In Q4 2021, the Government continued to provide supports, such as the Employment Wage Subsidy Scheme (EWSS) and Pandemic Unemployment Payment (PUP).

Despite such continued supports over the quarter, total Government Debt has remained relatively stable, declining by €3.9bn in Q4 2021 to stand at €256bn (Chart 5). This fall was driven by a reduction in long-term debt securities of €2.4bn and declines in short-term debt securities of €2.1bn.

Government financial assets increased by €2.6bn to stand at €114bn, due primarily to growth in deposits (€0.9bn) and debt securities (€1.4bn). Consequently, Government net financial worth improved over the quarter, by €6.4bn. Chart 5 also shows that Quarterly Government Debt (QGD), which is based on the Excessive Deficit Procedure (EDP) measure of debt, remained unchanged at €236bn.

Chart 6: Net Lending/Borrowing

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The domestic economy continued to be a net lender in Q4 2021, for the fourth consecutive quarter. Net lending stood at €13.2bn, a decrease of €1bn compared to the previous quarter (Chart 6). This drop was driven by a combination of movements across sectors.

The NFC sector continued to be a net lender, despite a decline of €0.8bn to €13.2bn in Q4 2021. By contrast, financial corporations continued to be a net borrower, declining by €0.9bn over the quarter to stand at -€3.3bn. The government sector also continued to be a net borrower, increasing by €1.4bn to stand at a -€1bn. Households’ net lending position declined €0.6bn to €4.3bn. Irish households have been net lenders since 2009.

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