Mick Wallace (Wexford, Independent)
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11. To ask the Minister for Finance his views on figures from the Central Bank of Ireland which show that the total lending to Irish households fell back to €106 billion in February, the lowest level since July 2005; and if he will make a statement on the matter. [16061/14]

Michael Noonan (Limerick City, Fine Gael)
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Total household 'on balance sheet' outstanding loan amounts fell to €106 billion in February 2014, comprising 78 per cent loans for house purchase with the remainder relating to consumer credit and other loans.

Aggregate household indebtedness has been declining in Ireland over the last number of years, both in nominal terms and as a share of household income. To a certain extent this is a necessary process given the high and ultimately unsustainable levels of lending to households in the years to 2008. Households are also reducing their indebtedness in response to the large reduction in the value of their assets, mainly due to the considerable decline in the value of housing wealth in the years to 2013.

Consumption by households in Ireland fell by 7 per cent between 2008 and 2013 according to the CSO. This was due to a number of factors, both the substantial decline in employment over the period but the reduction in lending to households is likely to have played a part. Over the medium term high levels of household indebtedness and the need to repair household balance sheets are likely to mean that the savings rate will remain relatively high, with implications for household consumption.   

Nonetheless, recent developments in the domestic economy have been positive of late. Employment grew by 3.3 per cent year-on-year in the last quarter of last year. Unemployment has fallen by three percentage points over the last three years. The recent Exchequer statement showed positive tax revenue growth in line with these positive developments in the labour market. Retail sales have been strong in the first months of the year, and were up 5.0% year-on-year in February. Turning to the outlook, my Department forecast 1.8 % private consumption growth this year at Budget time. My Department will set out a revised set of forecasts as part of the Stability Programme Update (SPU) later this month.