The government surplus (net lending, B.9) was €821m in the third quarter of 2023. This was down from a surplus of €1,972m in the equivalent quarter of 2022.
The smaller surplus was due largely to the change in corporation tax received from non-financial corporations; overall, taxes on income and wealth (D.5) were down €727m. Other income increased in the quarter. Taxes on products and production (D.2), which includes VAT, were up €235m, while social contributions (D.61, such as PRSI), were up €226m.
On the expenditure side, final consumption expenditure (P.3) grew by €755m compared to Q3 2022, to €15,602m, an increase of 5%. Social protection payments grew by €188m in the quarter. The cost of living payments were lower than in July to September 2022 of last year, so net Other Transfers (D.7) were €174m less. Capital Spending (P.5) was €188m higher than Q3 2022.
| Government balance (B.9)/quarterly GDP | |
| 2021Q1 | -6.07 |
| 2021Q2 | -2.41 |
| 2021Q3 | -2.27 |
| 2021Q4 | 4.12 |
| 2022Q1 | -0.28 |
| 2022Q2 | 1.15 |
| 2022Q3 | 1.47 |
| 2022Q4 | 4.02 |
| 2023Q1 | 1.28 |
| 2023Q2 | 1.88 |
| 2023Q3 | 0.64 |
The Gross Value Added by Non-Financial Corporations declined by €6.6bn in the third quarter of 2023 compared to the same period in 2022. This contributed to the decline in GDP for the country as a whole.
The change in GVA by activity is illustrated in Figure 2.2. There was a decrease of GVA in Industry of €9.1bn. As shown in the following chapter, much of this decline related to manufacturing carried out abroad on behalf of corporations resident in Ireland (contract manufacturing, producing exports of goods for processing). The domestically-focused sectors of Construction and Distribution, Transport, Hotels & Restaurants saw some growth in value added over the third quarter of 2022. Arts, Entertainment & Other Services added less value than in Q3 2022 (-€0.07bn).
While overall GVA declined by €7bn, its labour element (Compensation of Employees, D.1)) increased by €1bn, while its capital element (Gross Operating Surplus, B.2A3G) decreased by €8bn. The sector received large income inflows from abroad on its investments (up €13bn to €18bn), and the Gross Saving (B.8g) at €48bn was €11bn higher than the third quarter of last year. Capital investment was €23bn (down €5bn on Q3 2022), leaving net lending (B.9) at €22bn (up €14bn).
| Change since 2022Q3 | |
| Industry (excl. Construction) | -9.12 |
| Construction | 0.18 |
| Distribution, Transport, Hotels & Restaurants | 1.02 |
| Information & Communication | 1.54 |
| Professional, Admin & Support Services | 0.77 |
| Arts, Entertainment & Other Services | -0.13 |
The flows of investment income of Financial Corporations, both in and out, grew by more than 50% in the year since Q3 2022, with investment income outflows reaching €49bn (38% of GDP). These increases reflect higher interest rates by central banks, as well as greater activity in the sector. The timing of investment income payments left the sector a net borrower (B.9) of €0.9bn in the quarter.
Most of the flows relate to assets held overseas, and the net investment income is less than €2bn. As we can see from the International Accounts Table 1.5, the investment income (primary income) is mostly paid and received by Other Financial Intermediaries, such as non-pension investment funds. Thus, while the value of transactions are very high in the sub-sector, they have limited impact on the domestic economy. However, these corporations did pay €2.4bn in Compensation of Employees in the quarter, up slightly (€113m) on the same quarter last year.
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