Some good news for those who are intending to provide options under the new State personal investment account: Irish households are saving even more than was previously thought. That means there should be plenty of spare cash ready to be invested following October’s budget.

The Government reaffirmed its roadmap on the new tax-efficient investment account last week, just days after the Central Statistics Office (CSO) published revised numbers for household savings.

CSO figures showed that Irish households are a European savings outperformer, with a savings rate of 19.1 per cent for the first quarter of this year. Almost one in every €5 of disposable income is now being saved. This puts us on a par with those renowned German savers.

It’s a significant increase on the previously published rate – of just 12.5 per cent – and also a far cry from the heady days of the Celtic Tiger in 2007 when the savings rate sank below 2 per cent.

So why did the CSO make the revision? Why are Irish people saving so much? And what might it tell us coming into budget season?

Revision

Going from a savings rate of 12.5 per cent to 19.1 per cent is a significant revision.

“It’s very sizeable, and it’s surprising the extent to which it was revised upwards,” says Dermot O’Leary, chief economist with Goodbody. “This new data is pointing towards Irish households having amongst the highest saving ratio in the euro area.”

The change has arisen due to a separate revision in the national accounts for the first quarter of 2026. In those accounts, income was revised upwards while expenditure was revised downwards.

“The combination of these two revisions going back several years, with both moving in opposite directions, has led to the change in the level of household saving,” the CSO says.

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The finding means the ratio has been revised all the way back to 2020. The average since the start of 2023 has now been considerably altered; it was previously recorded as 12.7 per cent, but has now been revised upwards to 18.5 per cent.

The savings rate measures how much households are saving, expressed as a percentage of total disposable income. It’s calculated as household disposable income minus household consumption expenditure.

So if disposable income in a period was €10 billion, and spending was €9 billion, the amount deemed to be savings would be €1 billion, or a savings rate of 10 per cent.

Of course, each household will have their own individual savings rate; some may save significantly more, and many significantly less.

Should we be worried at such a scale of the latest revision?

A spokesman for the CSO says such changes “are a routine feature of national accounts” and arise because estimates, especially for the most recent year, “are based on incomplete data”.

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They also arise because of changes in methodology. For example, the household income figures include new data, such as the most recent Revenue Commissioners microdata files for wages and mixed income, as well as updated data from Ireland’s Pensions Authority.

And on the spending side, one source for the revision was the inclusion of updated household travel survey data, which led to downward revisions to estimates of household spending outside the State.

European rates

One of the biggest impact of the revisions is how we stack up when compared with our European counterparts.

Until the update, Ireland was a nation – apart from a brief blip during the pandemic – of solid, but unremarkable, savers.

In 2024, for example, under the old figures, Ireland had a savings rate of 13.49 per cent (down from the pandemic high of 25.8 per cent in 2020). This put it firmly mid-table, and below the overall euro zone average of 14.9 per cent.

By comparison, the Germans were saving 20 per cent of their income at the time.

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Taking the revised numbers into account, however, we can see that the Irish are among the most assiduous savers in the euro zone, on a par with the Germans, and about a third above the euro zone average of 14.3 per cent.

We’re substantially ahead of the French (13.5 per cent), the Spanish (11.3 per cent) and the Greeks, who actually have a negative rate. We are also saving at more than double the rate of our neighbours in the UK, where the first-quarter savings rate was 8.9 per cent.

The revised rate may explain why we have €175 billion sitting in household deposits – an increase of 58 per cent over the last six years.

But why are households saving so much?

High savings

O’Leary says such a high savings rate does point, to some degree, to a relatively low level of consumer confidence. Households are choosing to put away higher amounts as a precaution at a time of global and political uncertainty.

Ongoing hostilities in Ukraine and Iran, the perceived threat to jobs and otherwise from artificial intelligence, political uncertainty in the US – all these are conspiring to make households hold on to more of their incomes.

“Consumers can dip into their savings if they come across more difficult times,” says, adding that such a high rate will provide “a buffer for household spending going forward”.

And it’s not just that; our recent financial past is another factor.

“A lot of it does come back to the impact of the financial crisis on households’ attitude to risk – 17 years ago at this stage,” says O’Leary.

But could we be saving too much?

“Not at the moment,” O’Leary says, adding that it could be seen as more of a personal financial risk for households in that they may not be getting enough of a return on their money by keeping it in low-paying overnight type accounts.

Plenty of money then, perhaps, to fund the Government’s new retail investment accounts, which are due to be launched after the budget.

Budget impact

The bigger question, however, is whether or not this revised savings ratio should feed into this October’s budget. If we have such a strong savings rate, indicating the financial strength and stability of households, is there any need, for example, for cost of living measures?

Well, yes and no.

As O’Leary notes, the aggregate savings ratio doesn’t tell us anything about what is happening within income deciles; who is actually saving what. Perhaps it’s the richest households that are saving the most?

Possibly, although figures in the Central Bank’s latest household wealth statistics show that savings are not concentrated at the very, very high end, but rather, as O’Leary points out, spread out across the population.

In any case, O’Leary suggests that any cost-of-living measures need to go to those who are most in need, rather than broadly based incentives as has been the case until now.

“You need to make sure that they are targeted,” he says.