While the pandemic had massive humanitarian ramifications, it also influenced economic behaviour. We can still see a legacy of the pandemic today in the saving habits of Irish households, who are saving a lot more than they used to prior to the pandemic.
During Covid-19, household savings rates were incredibly high. By the end of the first quarter of 2021, Irish household savings maxed out at just under €9 billion. Obviously, the restrictions in place then had a lot to do with this. Closing off major sections of the economy restricted what households could spend their money on and large amounts of savings were accrued as a result.
While it’s interesting to see the radical effect the pandemic has had on Irish saving patterns, there is a major question we should be asking: why are we still saving so much? Yes, Covid played a part initially, but the pandemic has now gone and we still have significantly larger savings rates compared to pre-pandemic levels. At the end of the third quarter in 2022, Irish household savings amounted to just under €7 billion. To put that into context, Irish household savings stood at just over €3 billion at the end of the third quarter in 2019. So, why is there a difference of nearly €4 billion between those three years?