Savings rate in Europe hits record high
The coronavirus pandemic has forced many European citizens to rethink their financial management skills and habits. Therefore, experts have recorded a number of changes in the consumer behavior of Europeans.
Since the beginning of the pandemic, savings of most households in Europe have increased markedly. The ECB analysts attribute this to two main factors - a sharp pullback in consumer spending during quarantine and their intention to stockpile cash for a rainy day.
Between February and May 2020, European investors put €214 billion aside. As a result, deposit gains in European banks reached €7.3 trillion. According to the regulator, this is the highest figure in the last few years. The personal savings rate in Europe peaked at 136% in the period of March to April, when quarantine restrictions were the most severe.
However, experts fear that money will end up in citizens' pockets and will not be used for the benefit of the economy. ECB President Christine Lagarde confirms their concerns. She said that the recovery from the COVID-19 pandemic will be "restrained" as trade and production are unlikely to return to pre-crisis levels.
It will take time for the "phenomenal" jump in savings of Europeans to trickle into the eurozone economy, primarily into higher investment and spending, Christine Lagarde noted. In case these sectors take a tumble amid the crisis triggered by the pandemic, government and company debt is likely to increase dramatically.