Debt reduction at slowest level in almost eight years – Central Bank

The pace of debt reduction in households eased in the three months to the end of June to its slowest level in almost eight years, according to data from the Central Bank.

The level of debt was virtually unchanged, falling by less than €200m, compared with the period between January and March. This was the lowest quarterly fall since the end of 2008.
But the Central Bank said the ability of households to manage their debt is continuing to improve.

Debt, as a proportion of disposable income, fell over the period from 151.3pc to 150.4pc.
“The ratio of household debt to disposable income has fallen by 65.9 percentage points since its peak of 215.3pc in the second quarter of 2011,” the Central Bank said.

“Debt as a proportion of total assets also decreased marginally, falling from 18.9pc to 18.8pc over the quarter.”
But Irish households remain the fourth most indebted in the Eurozone, in terms of the ratio of debt to disposable income.

“In contrast to Ireland, households in a number of European countries saw their household debt to disposable income ratio increase over the second quarter.
“Swedish households experienced the most significant rise – 4.3 percentage points – as they upheld their position as the third most indebted country in the European Union, with household debt levels amounting to 153.4pc of disposable income.”

Meanwhile, the Government’s net financial wealth dropped by €3bn over the quarter, as Government assets fell by more than liabilities.
Government debt fell by €5.1bn, or 2.1pc, to €231.2bn in the second quarter, the Central Bank data shows.

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