SSIA special savings accounts look set to release more money than previously thought, according to a new estimate this morning.
Goodbody Stockbrokers says just under €15 billion will be paid out, up from the €14 billion it forecast a year ago. This is because more savers - around 44% of the total - are putting in the maximum amount of €254 a month.
Goodbody says the €14.9 billion will be released between May 2006 and April 2007, with the bulk coming towards the end of that period. It adds that around €6.3 billion will be released in April 2007 alone.
The stockbroker says recent surveys may have underestimated the level of SSIA funds which will be spent, as offers from businesses will tempt more consumers. The report says cars, home improvements and holidays are likely to benefit most. But Goodbody does not see any significant effect on the housing market, as the amounts are too low to materially affect prices.
The report says the overall impact of SSIA funds on the economy cannot be understated, as the total amounts are equivalent to just over 10% of estimated economic output in 2006. Goodbody expects a marked increase in consumer confidence, but spending on imported goods may depress GDP growth in 2006 and 2007.
The report also expects the Exchequer to benefit to the tune of €1.3 billion, with a boost to VAT, Customs & Excise and Stamp Duties, as well as Corporation Tax as companies record higher profits.
