Households in Ireland are experiencing a shift in their attitudes towards savings as the cost-of-living crisis continues to impact their financial situations, according to a survey conducted by the Bank of Ireland (BOI). The survey, which is based on responses from 1,000 people in the Republic, indicates that savings levels are rapidly declining from the elevated levels seen during the pandemic. This aligns with official figures that show households are dipping into their savings for various reasons. The findings of the BOI survey are closely monitored as the unwinding of high savings levels is helping to support consumer spending during a period of uncertainty marked by increasing consumer prices, rising interest rates, and a potential slowdown in the multinational sector that has traditionally boosted Ireland’s economic growth.
The Economic and Social Research Institute (ESRI) recently stated that consumption will play a significant role in driving economic expansion in 2023 and 2024. However, concerns persist among Irish households regarding the cost of living. The BOI survey highlights that the easing of the annual inflation rate has not alleviated these concerns, with cost-of-living issues remaining the primary worry for many. Housing costs and rents are also a cause for anxiety, potentially influenced by the recent increase in interest rates.
BOI’s chief investment strategist, Kevin Quinn, commented on the shifting attitudes towards saving in 2023, stating, “As the cost of living has become such a challenge for many households this year, savings levels have begun to revert to pre-pandemic norms.” This indicates that the financial strain caused by the cost-of-living crisis has compelled households to tap into their savings to meet their day-to-day expenses.
The decline in savings levels is a significant development that could impact Ireland’s economic recovery. As consumers draw down their savings, it is expected to provide a boost to consumption, thereby supporting economic growth. However, the long-term implications of reduced savings levels and the potential strain on household finances raise concerns about financial stability and resilience. It remains to be seen how the cost-of-living crisis will evolve and whether households will be able to rebuild their savings in the future.
In conclusion, the BOI survey highlights the changing attitudes towards savings among Irish households, with savings levels falling rapidly from their pandemic highs. The cost-of-living crisis, coupled with concerns about housing costs and rents, has led to a shift in financial priorities for many households. The impact of declining savings levels on economic growth and financial stability remains a subject of concern. As the cost-of-living crisis persists, it is crucial to closely monitor the evolving financial landscape and its implications for Irish households and the broader economy.