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CSO stats show shrinking Irish economy

Thursday, November 08 11:28:09

Household savings fell, corporate and business investment declined, banking business shrank and the Government's finances deteriorated last year.

That's according to the Institutional Sector Accounts - Non-financial and Financial, 2011 published today by the CSO, which brings together comprehensive information on the economic activities of households, businesses - both financial and non-financial - and the government sector.

Expressing household savings as a proportion of the gross disposable incomes of households the derived savings ratio fell from 12 per cent in 2010 to 10.7 per cent in 2011. The EU savings ratio fell during the same period from 11.7 per cent to 11.1 per cent.

Household savings continue to be used primarily to pay down debt in 2011 but also to fund the substantially lower levels of investment in property without recourse to borrowing.

Investment by companies in the non-financial sector fell from E7.2bn in 2010 to E6.7bn in 2011. Expressed as a percentage of the value added of the sector the derived investment rate has fallen from 9.2 per cent in 2010 to 8 per cent in 2011 reflecting the difficult trading environment. The profitability of the sector continued to improve increasing from E41.5bn in 2010 to E46.3bn in 2011, however, this is largely explained by the activities of multinational corporations operating in Ireland whose profits accrue to their foreign owners, the CSO figures show.

Balance sheets of financial corporations continue to decrease in size. This is particularly notable in relation to monetary financial institutions (i.e. mainly banks). The assets of the banking sector that peaked in 2008 at E1,864.5bn now stand at E1,468.5bn in 2011 and the corresponding liabilities have declined from E1,870.3bn to E1,469.3bn.

In 2011 capital transfers paid by government to the financial sector amounted to E5.8bn. The deficit on current government expenditure amounted to E10.3bn in 2011 and taken together with investment in the year of E4.2bn this explains the net borrowing of government of E20bn in 2011. The liabilities of government increased from E137.5bn in 2010 to E165.2bn in 2011 mainly to fund these items, as a result the debt/GDP ratio increased from 92 per cent in 2010 to 106 per cent in 2011.