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News : Irish Economy Last Updated: Jan 27, 2015 - 2:22 AM


Ireland remains biggest debtor of the western world
By Michael Hennigan, Finfacts founder and editor
Jun 19, 2014 - 8:30 AM

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With Ireland and the European Union in a Kabuki dance on relief for the sovereign debt that resulted from bailing out collapsed Irish banks, Ireland remains the biggest debtor of the western world.

Germany doesn't want to embarrass the Irish Government by issuing a categorical no while Irish ministers are like the Hyacinth Bucket (pronounced Bouquet) character in the early 1990s BBC sitcom 'Keeping Up Appearances' - - unwilling to lose face by revealing the truth of a grim situation.

The debt situation is worst than Greece's.

At end 2013, public and private non-financial sector debt was 499% of GNP (gross national product, which mainly excludes the profits of the significant foreign-owned sector), this compared with 304% in Greece; 300% in Spain; 266% in Italy and 201% in Germany.

The Central Bank said household debt was at €166.2bn or €36,203 per capita and at 192% of gross disposable income.

This compared with Eurostat data for 2012 of 84% in Germany; 66% in Italy; 123% in Spain; 133% in UK.

Ireland's 2012  ratio was third highest at 197% after Denmark's 266% level and the Netherlands at 270%.

According to the OECD, Greece household debt was at 91% in 2010.

Irish household net worth stood at €504.2bn at end 2013, equivalent to €109,771 per capita.

However, at over 40%, Ireland has a high rate of owner occupier homes without a mortgage according to Eurostat data published in 2011 [pdf; see chart page 9] - - compared with 12% in Sweden and less than 10% in the Netherlands.

This means that Irish household debt is highly concentrated.

Lending to Irish SMEs at end December 2013 was at €55.bn.

Ireland's total private sector debt was at 319% of GDP in 2013

Eurostat data shows that the level was at 223% of GDP in 2007 and Mary Cussen, an economist at the Central Bank, speculates that the rise reflects an increase in foreign financing by multinationals [pdf].

The Irish accounts of firms such as Intel and Pfizer are not publicly available and the CSO plans to issue an estimate of MNC debt later this year.

The non-financial sector debt of €686bn at end December 2013 is broken down as follows: net public debt of €171bn; household + SME debt at €221bn and large Irish + foreign companies at €295bn - - the indigenous sector is small for a developed economy.

ECB Statistics Pocket Book June 2014 [pdf]

Finfacts 2014: German living standard highest in Europe; Irish, Italians, Spanish among Eurozone's poorest

Finfacts 2014: Debt-challenged Eurozone facing long period of low growth

Public + Private Debt

% GDP
(GNP
for IRE)
Ireland Public 122*
Private 377
499
Greece Public 175
Private 129
304
Italy Public 132
Private 133
265
Spain Public 94
Private 206
300
Portugal Public 129
Private 252
381
Germany Public 78
Private 123
201
United States Public 104
Private 163
267
*Net of cash balance end Dec2013

GDP/GNP ratio 1.18

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