Dáil Éireann Debate, Thursday - 28 February 2019
16. Deputy Thomas P. Broughan asked the Minister for Finance the current levels of household debt; the way in which his Department monitors and invigilates this area in the wider interests of the economy; and if he will make a statement on the matter. [9760/19]
Amharc ar fhreagraOver the last decade, the household sector has undergone a significant period of active deleveraging. Since its peak of €204 billion in Q3 2008, the level of household debt has decreased by 32 per cent, or €66 billion. At end-Q3 2018, household debt stood at €137.5 billion, or €28,316 per capita, and is now at its lowest level since Q3 2005.
Irish household debt stood at 48 per cent of GDP in 2017, down from a peak of 117 per cent in 2009. A similar trend is seen when expressed as a share of GNI*, a measure of national income that controls for most of the multinational related distortions to GDP, with household debt now standing at 77 per cent of GNI*, down from 147 per cent in year 2009.
Recent data from both the Central Bank of Ireland and the Central Statistics Office indicate that the sustainability of household debt in Ireland has also continued to improve. From a peak of 215 per cent in Q3 2011, household debt as a share of disposable income has fallen to 126 per cent in Q3 2018, its lowest level since Q4 2003.
However it should be noted that although household debt is now broadly back to pre-crisis levels, there still exist pockets of high household debt amongst certain households. The Irish household sector remain one of the most indebted in the EU. On a household debt per capita basis, current data shows that Ireland is the 6th highest in the EU at €29,000 per person. Thus the risk associated with household debt remains an issue which I closely monitor. Indeed many policy initiatives introduced in recent years, particularly in the area of mortgage arrears, along with Central Bank lending regulations, have had a very positive impact on household debt levels.
Lastly in considering the role that debt plays in the economy, it is important to note, and also not lose sight of the fact that debt performs an important economic function for households and businesses, allowing them to spread and smooth their consumption and investment across time. Households require debt to purchase assets, entrepreneurs to start businesses, while established businesses require debt to invest and expand, all of which promotes economic growth.
