Banks urge Government to set up household saving accounts to help firms needing capital

DCM Editorial Summary: This story has been independently rewritten and summarised for DCM readers to highlight key developments relevant to the region. Original reporting by Irish Times, click this post to read the original article.

The Government should introduce a domestic savings and investment account (SIA) to encourage long-term investment, strengthen household financial resilience and help channel more Irish capital into productive investment, banks have said.

The call comes in a letter to Micheál Martin from representative group Banking & Payments Federation Ireland (BPFI) before an informal European Union leaders’ meeting in Belgium on Thursday when discussions are to take place on competitiveness and the future of the savings and investment union (SIU).

The banks highlighted the “low levels of participation” in EU capital markets by Irish consumers.

They said an SIA account would enable the Government to tackle this issue and increase the flow of households’ savings into Irish and European businesses.

BPFI chief executive Brian Hayes said it was “vital” Ireland examined what could be done at home to strengthen long-term savings, investment and financial resilience.

“A domestic SIA would give Irish households a simple, internationally competitive way to build assets over time while ensuring more domestic capital is available for Irish businesses and the wider European economy,” he said.

“International experience shows the scale of what is possible. Sweden’s investment account system has seen assets rise to the equivalent of 31 per cent of GDP by the end of 2024.

[ Cash is king in Ireland, but Sweden shows investors a better way ]

“An Irish SIA, modelled on successful systems in other EU countries, would give savers a straightforward and tax-efficient way to invest for the long term, while helping to mobilise more domestic capital for future Irish enterprises.

“Even a partial replication of such participation in Ireland would materially expand the pool of long-term domestic savings and support investment in strategic growth sectors.”

Hayes said current features of the Irish tax system, including the 33 per cent capital gains tax rate and the deemed disposal regime on exchange-traded funds, acted as “strong disincentives” despite the “clear benefits” of diversified, long-term investing.

“A well-designed SIA based on international best practice would remove these barriers by including a simple and predictable tax structure, no withdrawal restrictions and no limits on geographic investment options,” he said.

“Such an approach would support both individual financial resilience and Ireland’s broader economic needs by increasing the supply of long-term domestic capital available for Irish and EU companies.”

More generally, Hayes called for deeper co-operation with European counterparts.

“Given the wider geoeconomic context of [Thursday’s] EU leaders’ meeting, it is essential for both EU level and domestic reform efforts be accelerated and deliver visible improvements for citizens and businesses,” he said.

“We are calling on Taoiseach Micheál Martin to support the broader agenda to deepen the single market and champion a renewed drive for regulatory simplification and the advancement of the SIU.

“These steps are essential to improve Europe’s overall competitiveness, scale up investment and better integrate capital markets.”