Stock markets rise lifts household wealth

New statistics today show that Irish household net financial wealth - how much people own less their debts - grew by 58% to €95.8 billion in the first quarter of this year compared to the same time last year.

Today the Central Bank published - for the first time - the Quarterly Financial Accounts for Ireland. These show a complete and consistent set of quarterly data for all resident institutional sectors in the country.

The bank said that the recent financial crisis highlighted the need for 'close and timely monitoring of financial flows, at both a national and international level'.

'In particular, there is an increasing focus on financial wealth effects; private sector indebtedness; the growth of public debt; the evolution of financial intermediaries' balance sheets; and developments in exposures to the rest of the world,' the bank said.

The Central Bank says the 58% rise in net financial wealth comes on the back of the recovery of stock markets after the financial crisis and a reduction in household borrowings. The accounts exclude housing and non-financial assets.

The bank says the figures reverse the trends seen between the first quarter of 2007 and the first quarter of 2009, were the increase in household liabilities outpaced the increase in financial assets. This was also made worse by stock market volatility.

Householders have come net savers since the start of last year, as their borrowing levels fell. With falling consumption levels and property investment, they have also invested relatively more of their resources in financial assets.

Today's figures also show that between the last quarter of 2009 and the first quarter of this year, Government liabilities increased by 17%. This was mainly due to the capital injections into Anglo Irish Bank and Irish Nationwide (€8.3 billion and €2.7 billion respectively) and also by increased debt security.