The disposable income of Irish households rose by 2.5 per cent last year as a result of higher wages and increased profits of the self-employed.
Figures published by the Central Statistics Office (CSO) today show households' gross disposable income rose to €86.27 billion last year, up from €84.19 billion in 2011.
The institutional sector accounts, which bring together information on the financial activities of households, businesses and the Government, show household expenditure increased by €424 million to €77.92 billion in 2012.
Household savings, which are primarily used to pay down debt and fund property investment, rose by €1.77 billion to €11.1 billion.
The derived gross savings ratio, which expresses savings as a percentage of gross disposable income, increased from 10.7 per cent in 2011 to 12.5 per cent in 2012 as a result.
Meanwhile, the gross savings deficit of the Government fell by €1.73 billion to €8.55 billion in 2012. This is mainly due to an increase in taxes on income and wealth, which rose by €1.85 billion to €20.9 billion last year, the CSO said.
Capital investment by the Government amounted to €4 billion in 2012, according to the figures. When combined with the savings deficit, this pushes the net Government borrowing requirement for 2012 up to €12 billion.
The gross savings of non-financial corporations rose to €16.38 billion, an increase of by €1.7 billion compared with the 2011 figure.
Financial corporations, including banks, insurance companies and pension providers, had gross savings of €7.67 billion in 2012, up from €6.46 billion in 2011.
The net borrowing by the rest of the world from Ireland amounted to €6.04 billion, compared to €1.52 billion in 2011. This increase is explained by higher levels of gross savings in the economy, the CSO said.
