IRELAND’S CONSUMER debt hangover continued to ease last year, as the level of debt held by Irish households declined by 6.6 per cent to €185 billion.

The debt is now down by 8.9 per cent from the peak in 2008. The average Irish household has €108,250 in outstanding debt.

However, savings are also decreasing, indicating that people are focusing on paying down debt rather than saving for the future.

According to Institutional Sector Accounts – Non-financial and Financial 2010, published by the Central Statistics Office, when household debt is considered as a proportion of disposable income, the debt to income ratio was 203 per cent in 2010.

For every €1 Irish households earned, they owed € 2. This is a slight improvement on 2009, when the ratio stood at 206 per cent; however, back in 2002 the ratio was just 111 per cent. It compares with an average household debt to income ratio of 98.5 per cent in 2010 for the euro zone countries.

The publication shows that savings also fell last year, down by 13.5 per cent from a peak of €14.billion in 2009 to € 12.2 billion. “De-leveraging”, or paying down loans, amounted to almost € 10 billion last year.

However, disposable incomes also declined during the period, the report shows, and are down by 4.2 per cent from € 96 billion to €92 billion.