Thursday, July 21, 2022

Downward Historical Revisions and a Large 2021 Increase in the Modified Current Account

The current account of the balance of payments is an important macro-economic indicator. For a variety of reasons Ireland’s headline current account outturns are pretty useless as an indicator of the underlying position of the economy. To that end, the CSO have been publishing a modified current account for a number of years.  The latest estimates were published last week.

Historical Revisions

The first thing we note is that the historical series has been revised down.  This is something that may have been expected given it was thought that something may be mucking up the current account and the impact of the statistical discrepancy.  Anyway, here are the revisions.

Modified Current Account 2022 Revisions

For 2022, the estimate of CA* has been revised down from €24 billion to €13 billion.  This is still a significant surplus and equivalent to around 6.5 per cent of GNI* in 2020.

Large Increase in 2021

The second thing we note from the latest estimates is the large increase for 2021.  The 2021 estimate of CA* is a surplus of €26 billion or 11.1 per cent of GNI*.  In a very timely manner, the CSO have published institutional sector accounts that are consistent with the recent National and International Accounts.  Using these we can get a sectoral breakdown of the modified current account.

Modified Current Account by Sector 2022

The primary drivers of Ireland’s underlying position in the current account of the balance of payments are the household and government sectors.  This remains true to the large increase showing for 2021.

Household savings remained elevated in 2021 while the government deficit closed significantly - due mainly to surging revenues.  Typically taxes would not feature in a discussion of the current account.  They might impact sectoral positions but are generally internal transfers.

Corporation Tax and the Current Account 

Ireland is unusual in having a large share of Corporation Tax paid by foreign-owned companies.  Some of these have set up operations in Ireland to service the domestic market but the largest source of Corporation Tax are foreign-owned FDI companies with operations in Ireland to manufacture for or service markets abroad.

About three-fifths of Corporation Tax is based by US MNCs.  This tax is paid from the profits made on export sales and boosts Ireland’s current account.  The money is not counted as a factor outflow to foreign shareholders but goes to the government as corporate income tax payments.  Strong rises in other taxes such as Income Tax and VAT also helped improve the government’s position.  That the household sector maintained its savings at such an elevated level points to a strength in the position of that sector – albeit in aggregate terms.

The Corporate Sectors in 2021

At this stage we can’t delve too deep into developments in the corporate sectors.  That will come later in the year when a split by foreign and domestic ownership is made available.  For the moment we can see that this is where most of the revisions arise.  The “not sectorised” component of the current account for 2020 went from +€6.4 billion in the 2021 estimate to +€2.4 billion in the latest estimate. 

While the impact of the non-financial corporate sector in 2020 (though technically a residual to make the sectoral balances consistent with CA*) went from +€9.5 billion in last year’s estimates to €1.0 billion in the latest figures.  It is these two changes that led to the downward revision in CA* for 2020 shown in the opening chart.

The contribution of the NFC sector also seems to have played a role in the large 2021 increase in CA* – see the large red block in the column for 2021 in the second chart.  But, as noted above, probably best to wait until the foreign/domestic split of that is made available later in the year before drawing any conclusions on that. 

Who Should be Spending More?

Looking at the household and government sectors shows that the improvement in 2021 was more than just a measurement anomaly.  With the quarterly figures now available we can extend this to Q1 2022.  Here it is as a four-quarter moving sum.

HH Gov Savings minus Investment

One conclusion that could be drawn from this is that the government is (not yet) saving any of its corporate tax largesse – but the household sector is. Could we get households to spend more and the government to save a small bit?  And the increase in household spending can be greater than any saving done by the government.  We don’t need a +€20 billion outturn as currently shown in the above chart.

Events, Dear Boy, Events

If it’s extra spending we’re looking for then it may already be happening – but due to outside circumstances rather than a conscious decision to spend more. Here is national net monthly fuel imports. 

Fuel Imports Net 2005-2022

Pre-COVID these were running at around €400 million a month.  The latest figures go to May 2022 and show net imports of around €1 billion a month.  Import spending at that rate won’t be long in putting a dent in national net lending. But seems unlikely to be large enough to wipe it out.

Thursday, July 14, 2022

Continued Calm in the Aggregate Corporation Tax Calculation–apart from Capital Allowances Claimed.

This time last year we noted the relative calm across most of the items in the 2019 update of the Revenue Commissioner’s aggregate Corporation Tax calculation.  The recent release of the 2020 update has seen this largely continue. 

This may not be a surprise as, elevated though they are, Exchequer Corporation Tax receipts were relatively stable across 2018 (€10.4 billion), 2019 (€10.9 billion) and 2020 (€11.8 billion).  It is also hard to discern a clear impact of the COVID-19 pandemic in the figures.

Anyway here is the calculation of Taxable Income for the most recent five years that are available.

Aggregate CT Calculation for Taxable Income 2016-2020

The bottom line is that Taxable Income for the financial years of companies that ended during 2020 aggregated to just over €110 billion, an increase of around €4 billion on 2020.  There is probably a bit more going on under the headline aggregate figures.

The starting point of Gross Trading Profits was actually lower in 2020 compared to 2019.  However, this was offset by lower figures for capital allowances used and trade losses carried forward used.  There may be a pandemic effect here via the impact on the aircraft leasing sector which would have seen a big drop in gross income in 2020.

There was a reduction in trade charges in 2020.  In this context these are typically certain royalty payments for the use of intellectual property.  The reduction may be due to the restructuring undertaken by US MNCs and the relocation of the IP either back to the US or onshored to Ireland.  We might have expected this to result in an increase in capital allowances but as noted above they actually fell.

There is however some tumult if we look at the figures for capital allowances claimed.  The figures in the above tables are for capital allowances used, that is actually offset against positive income in the year they are claimed.  In some cases firms may claim capital allowances but not have sufficient positive income to use them against.  Those unused capital losses are carried forward to subsequent periods where they may be offset against positive profits if they arise. [Technically, the unused capital allowances are carried forward as trade losses.] 

Aggregate CT Calculation Capital Allowances Used and Claimed 2013-2020

The first time we really got interested in these figures was when those for 2015 were published.  These gave insight into the 26 per cent GDP growth rate published by the CSO for that year.  In 2015, the amount of capital allowances claimed jumped from €24 billion the previous year to €51.5 billion.  There was an associated increase in the figures for capital allowances used which is also reflected in the increase in Gross Trading Profits (which are included in GDP).

The following years saw increases but nothing that really stood out – until 2020.  As can be seen, claims for capital allowances went from €86 billion in 2019 to €145 billion in 2020.  The annual increase in 2020 is bigger than the annual total for 2015.  But what is unusual now is that it is not associated with increases in the other related items.

As discussed above there was actually a slight drop in the amount of capital allowances used in 2020, as there was for Gross Trading Profits.  So we have a huge increase in capital allowances claimed but no evidence of an associated increase in profits.  It is hard to know what is behind the rise in claims for capital allowances.

The panel on the right of the table gives the figures for the consumption of fixed capital for non-financial corporates in the national accounts.  We can see that by and large the national account version of depreciation tracks the tax treatment of it.  Consumption of fixed capital jumped in 2015 and typically has been around 85 per cent of the figure for capital allowances claimed.

The figures can differ in how depreciation is treated.  Most notable the capital allowances for aircraft for leasing can be claimed over eight years whereas such aircraft will be depreciated over 25 years in the national accounts.

The difference between the figures exploded in 2020 with consumption of fixed capital in the national accounts being a little over 60 per cent of the figure for capital allowances claimed in the Corporation Tax statistics.  There may be some insight in the forthcoming annual national accounts set to be published by the CSO.

We return to the aggregate Corporation Tax calculation and look at how Gross Tax Due as derive from Taxable Income becomes Tax Due.

Aggregate CT Calculation for Tax Due 2016-2020

Again, there is really nothing of note that stands out in the 2020 figures.  The biggest impact on Tax Due comes from Double Taxation Relief and the Additional Foreign Tax Credit which reflects the tax paid in foreign jurisdictions on the worldwide income of Irish resident companies included in their Irish tax return.  A move to a territorial system would see such foreign income removed from the Irish tax base.

Elsewhere there were only small changes.  The amount of the R&D tax credit remained relative stable compared to 2019.  And the end point of Tax Due gives figures that closely match the receipts collected by the Exchequer.

There may be a bit more going on in the next releases.  In 2020, Corporation Tax jumped to €15.3 billion and is on track to be even higher in 2022.  And maybe additional data releases will give some insight into that unusual jump in capital allowances claimed in 2020.

Tuesday, July 12, 2022

Distributional National Accounts for the Household Sector

Eurostat have published distributional national accounts for the household sector.  There is a small number of countries with national estimates with centralised estimates using a common methodology applied by Eurostat are available for all Member States.

Ireland is one of the countries with national estimates and these are available for 2015 and 2016.  The aggregates come from the national accounts with the distribution based on the relevant SILC and the 2015 Household Budget Survey. 

The following table presents the 2016 estimates showing the distribution by income quintiles (fifths of the distribution, bottom 20 per cent, next 20 per cent and so on).  The ratio of the share of the top 20 per cent to the share of the bottom 20 per cent is shown in the final column (S80/S20) to give some insight into the inequality of the distribution.

Household Sector Distributional Accounts 2016

The accounts follow the typical layout of the sector accounts going from output to income to disposable income to consumption and concluding with savings.  In this instances, social transfers-in-kind (goods and services used by households but paid for by another sector, usually the government) are accounted for.  This gives Adjusted Gross Disposable Income on the income side and Actual Individual Consumption on the consumption side.

The starting point is Gross Operating Surplus which for the household sector is the value added from the provision of housing services.  Some of this will be actual rents charged by household landlords to other landlords but most of it will be the imputed rents of owner-occupier households.  This “income” nets out as consumption under CP04: Housing.  Adding the first two items gives the value added, or GDP, of the household sector.

Next is by far the most significant item on the income side: compensation of employees received.  This is wages and salaries and also any social insurance contributions made by employers for their employees.  Like self-employed income this has an unequal distribution but is not skewed to the same extent.  In 2016, the top quintile received almost ten times more employee compensation than the bottom quintile.

The next item, Gross Mixed Income, is primarily the gains (or losses) from self employment.  This has a highly unequal distribution with almost 25 times such income going to the top 20 per cent (of the income distribution) compared to the bottom 20 per cent - €31.5 billion versus €3.3 billion.

This distribution does not stand out if we look at the equivalent quintile share ratios for the other countries which have provided national estimates to Eurostat.  As these are experimental statistics some caution is probably warranted.

Eurostat Household Sector Distributional Accounts S80S20 Ratios 2016

Ireland’s quintile share ratio for employee compensation is lower than those for the Netherlands and Sweden.

Property income received (mainly interest and dividends) is also heavily skewed with the top quintile in Ireland receiving over 25 times more than the bottom quintile.  Net property income for the bottom quintile is essentially zero while it was around €2 billion for the top quintile in 2016.  As noted above, building rents, most notably for dwellings, are not included in property income as they are counted as the provision of services and come under operating surplus.

The output and income figures resulted in a Gross National Income for the household sector in Ireland of around €110 billion in 2016.  Of that, around ten times more was attributed to the top quintile relative to the bottom quintile.

To get to Gross Disposable Income taxes and social transfers must be accounted for.  In 2016, the household sector paid €21.5 billion in taxes on income and wealth (in practice this is almost all income taxes).  Of this, almost half was paid by the top 20 per cent.  There were almost €18 billion of social contributions paid.  This includes PRSI (both the employee contributions and the employer contributions in respect of employees) and contributions to occupational and private pension schemes.  Around €6 billion of the social contributions paid went to such schemes.  Social contributions are also skewed towards the top of the distribution but the difference between the fourth and top quintiles is noticeably smaller.

Social benefits received are mainly transfer payments from the government but will also include pension income from occupational and private pension schemes.  Around €4 billion of the social benefits paid to households in 2016 came from such schemes.

After these we get to the national accounts measure of Gross Disposable Income (gross in this context means that it is before the consumption of fixed capital, i.e. depreciation, is accounted for).  Ireland had a quintile share ratio of 4.0 for gross disposable income in 2016.  Of the other countries with national estimates only Czechia had a lower estimate.

As noted above, these figures also factor in social transfers-in-kind.  These are goods and services provided to households but paid for by non-profit entities or the government.  The government provision can be purchases from market producers (such as medicines) or via non-market production of the government sector itself (such as health services).

Many of the quintile share ratios for this item are less than one as the bottom quintile receives more than the top quintile.  For Ireland, in 2016, it is estimated that the bottom decile received €6.1 billion of social transfers-in-kind with €3.7 billion going to the top quintile.  This gives a quintile share ratio of 0.6 which is the lowest for the countries shows.

Adding social transfer-in-kind to Gross Disposable Income gives Adjusted Gross Disposable Income.  As a result of the distribution of social transfers-in-kind, Ireland moves below Czechia and has the lowest quintile share ratio for Adjusted Gross Disposable Income in the set of countries shown.  This is illustrated by the graphic published by Eurostat with the results.

Eurostat Distributional National Accounts - Income and Consumption

In the left-hand panel, Ireland has the highest share of Adjusted Gross Disposable Income going to the bottom quintile (but this is only for the seven countries with national estimates).

Finally, we can look at consumption and savings.  At this point an adjustment is made for the change in pension entitlements and this is the difference between the contributions to occupational and private pension schemes and the benefits received by households from such schemes.  As set out above, the difference between these was around €2 billion in 2016.  This is considered part of the savings of the household sector so is added back in here.

The consumption figure used in the presentation is Actual Final Consumption (which is equivalent to Actual Individual Consumption).  It excludes collective consumption such as policing and street lighting etc. 

In 2016, Irish households had €113.5 billion of Actual Individual Consumption with the top quintile have 2.3 times the amount of the bottom quintile.  Although Ireland had the lowest quintile share ratio for Adjusted Gross Disposable Income it has the highest quintile share ratio for Actual Individual Consumption.  Using the quintile share ratio indicates that Ireland had the most unequal distribution of consumption for the countries shown.  This can be seen in the right-hand panel of the graphic with Ireland having the smallest share of AIC going to the bottom quintile.

As it is not income that is is driving this result we must look elsewhere for an explanation.  Savings may provide it.  Italy hasn’t produced distributional estimates for consumption so is excluded.

Eurostat Household Sector Distributional Accounts Savings Rates 2016

There certainly is a bit going on here, especially for the bottom and top quintiles.  For all the countries shown there are very large differences between the savings rates of the bottom and top income quintiles.  All bar Ireland that is.  Indeed for most countries the bottom quintile is shown to be dissaving (by having a negative savings rate).  This excess of consumption over income in the bottom decile is particularly true for the Netherlands, Slovenia and Sweden. 

Ireland has a positive savings rate for the bottom quintile and the highest among the countries shown.  And at the other end, Ireland has the lowest savings rate for the top quintile.  This means that the change in the quintile share ratio when going from income to consumption is relatively modest in Ireland, going from 2.6 to 2.3 whereas for other countries the difference is much larger.  In The Netherlands, for example, the quintile share ratio goes from 3.6 for income to 1.8 for consumption.

The only quintile in Ireland that has a negative savings rate is the second quintile.  This could be due to a higher concentration of retirees in this quintile who may have savings to draw on to fund their consumption.  But it does see Ireland going from having the highest savings rate for the bottom quintile to the lowest one for the second quintile.

Such minor anomalies aside, at a broad level, the Irish estimates seem reasonably sound.  There may be differences in definitions or exclusions from the data that are behind some of the very large variations in the savings rates shown for other countries. In relative terms, Ireland may not be as good for the distribution of income, or as bad for the distribution of consumption, as these figures suggest.

Over time it is likely that more emphasis will be put on the publication of distributional national accounts estimates like these and any such wrinkles may be ironed out.  For now, it seems the case that the opening table gives a fairly good account of what is happening across the income quintiles of the household sector in Ireland’s national accounts.  And that’s a pretty good start.

Wednesday, May 18, 2022

Ireland’s Burgeoning Current Account Surplus and the ‘Statistical Discrepancy’ in the National Accounts

The current account of the balance of payments is an important macroeconomic indicator.  As with many of Ireland’s macroeconomic statistics the underlying picture is distorted by the activities of MNCs.  The modified current account, CA*, is an attempt to overcome this and the CSO will publish the 2021 estimate over the coming weeks.

As with last year, we can look to the sector accounts to try and get a preliminary perspective on where the current account might be going.  Again, at this stage we will limit the analysis to the household and government sectors are these are the least impacted by the MNC distortions but have seen some significant pandemic-related changes in recent years.

Gross Savings minus Investment for Gov and HH 1999-2021

Over the twenty years shown, this paints a picture we are pretty familiar with.  More recently, the household sector has been running a large surplus as savings soared.  On the other hand the government has seen large deficits as spending increased in response to the pandemic.  The chart shows gross savings (income not used for consumption) minus investment (capital formation). 

The preliminary figures in the quarterly sector accounts are that for 2021 the combined household plus government sectors had a surplus of savings over investment of €14.6 billion.  This will contribute to a significant current account surplus for 2021.

For 2020, the equivalent figure for the two sectors was a surplus of €8.7 billion.  However, when the contribution of the other sectors of the economy (the corporate sectors) were added, the estimate of the modified current account for 2020 was €24.0 billion.

As was considered here after the results were published this seemed a bit excessive.  There is no doubt that Ireland is running a large current account surplus, but one this is equivalent to 11.5 per cent of national income?

We can use the 2020 Institutional Sector Accounts to get some insights into the sources of this surplus.

Gross Savings minus Investment for Domestic Sectors 2013-2020

Obviously 2020 was a tumultuous year but the increased deficit of the government sector was offset by the surplus of the household sector.  Given what was going on the changes for the domestic corporate sectors both non-financial and financial are relatively modest. 

In this chart, the category for foreign corporations/redomiciled PLCs is a residual that makes the breakout by sector consistent with the estimate of the modified current account.  Although positive, the contribution of this element to the current account fell in 2020 so doesn’t seem to tie in with efforts to explain a burgeoning current account surplus.

What may be worth looking at is the light grey segments of the bars.  This is the “not sectorised” part of the current account.  As set out here, this item arises in Ireland’s national accounts due to the discrepancy that typically exists between the income and expenditure estimates of GDP produced by the CSO.  The official estimate of Ireland’s GDP is essentially the average of the two approaches.  If the figures are close to each other this discrepancy will be small.  However, it is perhaps not a surprise that it can be large – and volatile.

The following table shows the estimates of GDP from the income and expenditure approaches for 2015 to 2020.  Start at the top of the table for the income approach (wages plus profit plus net product taxes).  And go from the bottom of the table for the expenditure approach (C + I + G + X – M).  The official GDP estimate is the midpoint of the two.

Income and Expenditure Approaches to GDP

As can be seen, for 2020, the income approach gave a GDP estimate of €369.7 billion while that for the expenditure approach was higher at €376.1 billion.  This €6.4 billion difference is resolved by a €3.2 billion “statistical discrepancy” on either side.

This position was the reverse of 2019 when the estimate of the income approach exceeded the estimate from the expenditure approach.  In overall terms, the income estimate went from being €4.0 billion more than the expenditure estimate in 2020 to being €6.4 billion less than it in 2020. All told, this resulted in a €10.4 billion swing in the impact of the “statistical discrepancy” between the two years.

In most instances, given the scale of the figures involved, the statistical discrepancy is not a significant factor.  However, as we work down the accounts and get to things like the current account then it can be significant relevant to the size of those outcomes.  And if we go further again and looked at a sectoral breakdown of the current account then these changes are certainly significant.  In the previous chart, the change in the contribution of “not sectorised” to the current account from 2019 to 2010 was the €10.4 billion referred to above.

Just because something is “not sectorised” doesn’t mean that it doesn’t exist; it’s just that the figures don’t give any insight into what it actually is.  There is some reason why the 2020 growth of the expenditure estimate (6.1 per cent) was much stronger.  It could be that there was an underestimate in 2019 and this is something that the statistical discrepancy allows for.

Or maybe there was something missing from the income approach estimate for 2020 that dragged down its growth rate (3.1 per cent).  Again, this is something that the statistical discrepancy allows for.

Of course, if it was known what was causing the divergence between the figures it would just be included.  The statistical discrepancy arises because it is not known what is causing it.  Have we any reason to put more weight on the income or expenditure estimates of GDP? Not from this remove at any rate.

What it does do is give pause for thought where there are references to a current account surplus of close to one-eighth of national income.  For sure, there is a current account surplus and it does give scope for additional spending (by who?) but maybe we should be looking at average over a number of years rather than being fixated on the estimate for any one year. 

Over the six years shown in the table above, the annual average for difference between the GDP estimates from the income and expenditure approaches is less than €300 million, or pretty much nothing in the context of a GDP number that now exceeds €400 billion. 

This may give some credence to a view that there is nothing systematic going on.  However, it should be noted that the preliminary 2021 figures in the quarterly national accounts show a statistical discrepancy of a similar magnitude and direction to 2020.

Gross Savings minus Investment for Not Sectorised 2005-2021

So, what we have seen for the household and government sectors and not sectorised all point to another large CA* estimate in the forthcoming release.  Of course, these are preliminary figures and may be revised when the full National Income and Expenditure results are published.  But if measurement issues aren’t enough to dispel any complacency, don’t forget the lurking impact that corporation tax revenues are having on the current account.

Friday, May 13, 2022

The Continuing Improvement of the National Balance Sheet

Ireland’s national balance sheet has gross amounts and a volatility that is not seen in the figures for most other countries.  The gross amounts are due to the impact of MNCs and the IFSC but do largely net out.  The volatility is partly due to the roller-coaster house prices have taken in recent decades.  When worked through this is what emerges for net worth per capita.

Net Worth Per Capita 2001-20

Housing plays a role but does not fully account for the changes shown.  The per capita value of the stock of dwellings (excluding site value) went from €35k in 2001 to €67k in 2006 and then fell to €43k in 2010 before rising back to €60k in 2020.

There are some items not included in the figures published by the CSO.  Not only is the site value for dwellings excluded but the value of all land is excluded.  The CSO does not provide figures for the stock of non-produced, non-financial assets.

The inclusion of such figures would certainly change the level in the chart and also perhaps some of the changes.  Land is the most significant non-produced, non financial asset but there are others.  This useful note from the CSO sets them out.

Most non-produced, non financial assets such as land and natural resources can’t be traded across borders.  All that can change is their ownership.  But there can be trade in non-produced assets like brand names, trademarks, logos, domain names and other marketing assets.  The IP onshoring to Ireland in recent years has included significant amounts of these.

Net Acquisition of Non Produced Assets 2001-20

In 2018, net acquisitions of non-produced assets exceeded €50 billion.  These acquisitions will have reduced financial net worth through either the reduction of financial assets to pay for them or, more likely, an increase in financial liabilities if debt is used to buy them.  In per capita terms, the amount is around €10,000 per person so goes someway to explaining the reduction in total economy net worth per capita shown for 2018 in the first chart.

There is a growing list of countries who provide figures for non-produced assets to Eurostat but it remains a minority.  Czechia and France provide the most comprehensive figures but all Germany, Estonia, Croatia, The Netherlands, Austria, Slovakia, Finland and Sweden now provide figures for the value of land. 

For produced assets Ireland has a fairly comprehensive figures for fixed assets (some suppression issues aside) but no figures for inventories or valuables.  Most countries provide figures for inventories to Eurostat but only a small minority do so for valuables.

The following table shows the gross amounts that give rise to the per capita figures in the first chart.

National Balance Sheet 2001-2020 Table

The financial figures can be counted in trillions.  At the end of 2020, financial assets on the national balance sheet summed to €9.0 trillion with liabilities of €9.7 billion.  This negative net financial worth was offset by the €1.1 trillion of non-financial assets included in the figures.  That gives the total economy net worth of €464.7 billion which translates to €93,400 in per capita terms.

As set out above the inclusion of other non-financial assets such as non-produced assets like land, natural resources and brands and other things like inventories or valuables would increase the net worth figure.  In most cases this would just be a change in level and the trend in net worth per capita would be largely the same.  As discussed above the inclusion of the non-produced assets purchased from abroad would impact both changes and levels.

The figures that are provided for produced fixed assets have a breakdown by type of asset.

National Balance Sheet by Fixed Asset 2001-2020 Table

The total stock of fixed assets has increased significantly in recent years but the largest contributors to this increase are the suppressed categories of IP and transport equipment.  When last broken out individually, for 2014, their combined value was €117 billion.  For 2020 the equivalent figure is €630 billion.  Turmoil in the aircraft leasing sector may have an impact of the 2022 figure.

We can do a sectoral breakdown of financial net worth:

National Balance Sheet by Sector 2001-2020 Table

This highlights that while the gross amounts for the financial sector are enormous, running into the trillions, the net amounts are relatively modest.  Non-financial corporations have built up a large negative net worth position in recent years.  This is linked to acquisition of assets such as IP and aircraft.

The government sector also has a significant negative position but did not lead to an equivalent increase in fixed assets as much of the debt was used to cover current spending. 

There has been a remarkable improvement in the net worth position of the household sector in recent years.  In the last two years shown in the above table the financial position of the household sector improved by €70 billion. 

Figures from the Central Bank suggest there was a further improvement of almost €50 billion in the financial position of the household sector in 2021.  This was achieved through a continued rise in deposits (+€16.2 billion) and also a large increase in life assurance and pension entitlements from private schemes (combined + €22.5 billion).  The contribution of debt reduction was relatively modest (€1.5 billion).

When housing assets are included (and the Central Bank include site value) the net position of the household sector is said to have improved by €140 billion in 2021, or €28,000 per capita.

The opening chart shows net worth per capita peaking in 2006 at €104,500.  The trend, and recent data from the Central Bank, suggest a new peak will be set in 2021. Hopefully it won’t go over a cliff this time.

To conclude, here are comparable figures for the EU15.  As discussed above some countries have more comprehensive figures available but there are presented here in a like-for-like basis.

EU15 Net Worth Per Capita 2001-2020

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