12.3% to be exact
I am dubbed a bit of a doomsayer around here, but when I see something positive, in my view, I will mention it. There has been a dramatic increase in household savings from 0% in 2007 to 12.3% in 2009. This is an interesting report released from the CSO today, as it gives an indepth breakdown of total production, GDP, consumption, expenditure etc of Government, Financial sector, Non Financial companies and households.
Its unfortunate that people are getting nothing in interest for the discipline of saving and also that most of it is going to service debt. However from a behavioural context its encouraging that the discipline of saving has re-established even in the absence of financial incentives.
10% of household income being saved is reasonably satisfactory as it should supply the funding for firms to invest with. This natural market for money supply is regulated by the rate of interest that the borrower and saver agrees upon in a macro environment. This is the cornerstone of a healthy economy with a savings induced growth. No bubbles, booms and busts.
However thats the ideal world. In the here and now, savers need to be rewarded with a higher rate of interest and the monstrous debt monkey of up to €1 Trillion needs to somehow be addressed and dealt with.
But as I say, nice to get some real good news in the midst of the gloom.