Paschal Donohoe (Dublin Central, Fine Gael) | Oireachtas source

I thank the Deputy for his kind words. It is a challenge that we will face, as will every other economy that has been closed for a period and is beginning the process of reopening.

In terms of where we are now, if he looks at where we were in 2020, we estimate that our household savings ratio, that is, the portion of income that is not being consumed, reached almost 24% across that year. That is approximately double where we have been in previous years. If we look at the comparison between February 2020 and February 2021, there was an increase in deposits of approximately €11 billion during that period so there has been a very considerable increase in savings.

Regarding how much of that will be spent, at what rate and where, the stability programme update has relatively conservative assumptions regarding this. We are assuming that these savings will be released gradually back into our economy. Our assumption is that the willingness of families to spend those savings will be dependent on the degree of optimism or certainty they face regarding their own future, particularly in terms of where we are with employment.

In terms of what we can do to respond to that challenge, the first thing is to see how we can get our economy open in a sustainable way. There is a way in which these household savings are not facing significant bottlenecks in terms of how that investment can be released into our economy. Second, we have to consider what we can do to try to encourage that money to be spent in ways that are more conducive to public goods within our economy and the sustainable development of our economy.

To use the issue the Deputy raised of cars, he will be aware of all the changes we made in the latest budget where we fundamentally changed our motor taxation system and also our taxes in respect of the purchase of a car to make it more aligned to public goods and reduction of climate change. There are policy tools available to us in that particular area, for example, in our old VRT and motor tax regimes, that would not have been available.