This release has been compiled during the COVID-19 crisis. The results contained in this release reflect some of the economic impacts of the COVID-19 situation. For further information see our Information Note.
The government deficit (net borrowing, B.9) was €1,412m in the second quarter of 2022. This includes €2,851m in net capital transfers (D.9), which are payments for defective concrete blocks that will be made over the coming months.
In spite of this large exceptional item, this quarter's deficit is lower than the deficits during the pandemic. In the equivalent quarter of last year, the deficit was €2,342m and in Q2 2020 it was €6,754m. The improved position this quarter was due to both higher revenues and lower expenditure.
On the income side, revenue from taxation was up due to higher earnings, and higher profits. Taxes on income and wealth (D.5) grew by €2,733m (19%), as households paid more income tax and companies paid more corporation tax.
On the expenditure side, many of the supports to households that had been introduced during COVID-19 were being phased out. As the Employment Wage Subsidy Scheme diminished, subsidies (D.3) went from €1,695m in this period of 2021 to €658m this quarter, a reduction of €1,036m. Social transfers (D.62) such as the Pandemic Unemployment Payment went from €7,659m in the second quarter of 2021 to €6,799m this quarter, a decline of €860m.
| Government balance (B.9)/quarterly GDP | |
| 2019Q1 | -2.29 |
| 2019Q2 | 1.02 |
| 2019Q3 | -1.14 |
| 2019Q4 | 4.03 |
| 2020Q1 | -4.14 |
| 2020Q2 | -7.98 |
| 2020Q3 | -6.55 |
| 2020Q4 | -1.89 |
| 2021Q1 | -6.31 |
| 2021Q2 | -2.31 |
| 2021Q3 | -2.12 |
| 2021Q4 | 3.79 |
| 2022Q1 | 0.17 |
| 2022Q2 | -1.18 |
The Gross Value Added (GVA, B.1g) of Non-Financial Corporations, which drives Ireland's GDP, was 18% (€15.5bn) higher in the second quarter of 2022 compared to the equivalent quarter last year (see table below). The MNE-dominated Industry sector (excluding Construction) and the Information & Communication sector both increased by 17.8% in Q2 compared with the equivalent quarter of 2021. The domestic based sectors continued their recovery from COVID-19 restrictions, Construction exhibited an increase of 19.1% compared with the same quarter of 2021 while the Arts & Entertainment sector rose by 21.9% year-on-year. The Distribution, Transport, Hotels & Restaurants sector posted an increase of 8.1% in Q2 2022. Year-on-year increases were also recorded in the Professional & Administrative Services sector (5.3%).
The €15.5bn growth in GVA included growth of €2.5bn in pay to workers (D.1) and €12.0bn in profit (B.2A3G). Most of the additional profit then flowed out to the owners of the corporations in other countries as investment income (D.4 net €7.3bn), with an extra €1.5bn being paid to the Irish government as corporation tax (D.5). The rest (€3.2bn, B.8G) was growth in the companies' savings.
Non-financial corporations invested €22bn in capital assets (P.5) in the quarter, an increase of €6.3bn on the equivalent quarter of 2021. The largest increases in fixed capital expenditure were R&D Service Imports and Trade in IP (up €3.6bn) and Machinery and Equipment excluding Aircraft related to Leasing (up €2.5bn).
| Change since 2021Q2 | |
| Industry (excl. Construction) | 8.17 |
| Construction | 0.84 |
| Distribution, Transport, Hotels & Restaurants | 1.48 |
| Information & Communication | 3.15 |
| Professional, Admin & Support Services | 1.58 |
| Arts, Entertainment & Other Services | 0.27 |
Financial corporations (S.12) had higher GVA in this quarter than in the second quarter of 2021. There was an increase of €325m in pay to workers in the sector, and also an increase profit (B.2A3G) of €209m. In this sector, the investment income (D.4) resources (received) and uses (paid), are much larger than the value added, and have a bigger impact on the saving (B.8G) and net lending (B.9). The flows of this investment income, both in and out, grew in the quarter. As the outflows exceeded the inflows, the sector was a net borrower of €1.6bn in Quarter 2.
As we can see from International Accounts Table 1.5, the investment income (primary income) is mostly paid and received by Other Finanical Intermediaries, such as non-pension investment funds, and most of the this is paid to, and received from, the rest of the world. Thus, while the value of transactions are very high in the sub-sector, they have limited impact on the domestic economy. Further details are given in the International Accounts.
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