The Bank of Ireland/ESRI Savings and Investments Index, which measures Irish peoples’ sentiment towards savings and investments increased to 101 points in April from 98 in March 2018. This represents a return to the upward trend observed since December 2017.
The monthly Savings Index recovered from 99 last month to 103 in April. A big improvement in attitudes towards saving drove this increase. The monthly Savings Attitudes Index, which asks people about their saving behaviour and how they feel about the amount they save, increased to 106 points in April from 99 in March. The proportion of regular savers improved to 51 per cent in April versus 46 per cent in March with regular saving improving noticeably for the under 50s.
Brexit and Saving
This month consumers were asked if the uncertainty around Brexit affected their savings patterns in order to understand if people are saving more in anticipation of Brexit. The vast majority of people (92 per cent) answered that Brexit was not affecting their savings patterns. Younger savers appeared marginally more concerned about the effects of Brexit – 6 per cent of under 50s were saving more as a result of Brexit compared with only 1 per cent of over 50s.
The survey also found that Brexit was a greater motivation for savers outside Dublin compared with in Dublin. Outside Dublin 5 per cent of people said they were saving more as a result of Brexit compared with only 1 per cent in Dublin.
Similar to its savings counterpart, the Investment Index measures respondents’ attitudes towards investing and how they view the investment environment. The monthly Investment Index increased to 100 points in April from 97 in March 2018 ticking back up to the level in January of this year.
The monthly Investment Attitudes Index increased to 98 index points in April from 94 in March – 33 per cent of people were regular investors in the month, up from 29 per cent in March.
Meanwhile, easing trade tensions helped both market performances and the Investment Environment Index in April. Stock markets enjoyed their best month so far in 2018, gaining 2.8 per cent. This positive backdrop was reflected in the Investment Environment Index which increased from 99 to 102.
This Risk Barometer asks households how they would consider using a windfall gain of €10,000. The April results showed Irish people edging more towards investments and away from saving. The percentage of people saying they would invest a €10,000 windfall rose to 36 per cent from 25 per cent in February. However, generally Irish people retain a heavy preference for saving with 64 per cent of people saying they would consider saving a windfall gain.
Commenting on the Bank of Ireland Savings and investments Index, Tom McCabe, Bank of Ireland Investment Markets said: “The finding that Brexit is almost a non-event for 92 per cent of Irish savers at present is the standout discovery from this month’s analysis of Irish savings and investment patterns. This suggests some level of uncertainty around how Brexit could affect the Irish economy and peoples’ finances.
However Irish people have built up a large savings buffer in recent years, amounting to over €100 Billion. A combination of improving employment and wages coupled with tax cuts have helped make saving more affordable for Irish people. Therefore, it seems that Irish people have certainly put some protection in place against the fallout from a hard Brexit, even if they have done so unintentionally.”
The ESRI works towards a national vision of ‘Informed policy for a better Ireland’. This means producing high-quality analysis to provide robust evidence for policymaking, with the goals of research excellence and policy impact.
The ESRI produces research that contributes to understanding economic and social change in the new international context and that informs public policymaking and civil society in Ireland.