A glance at BNP Paribas’s economic research
Households continue to save more and to buy fewer cars
European households are saving, a lot. Perhaps less so than in 2020, when their spending on transport, eating out and leisure was artificially reduced. But still much more than in 2019, when the savings rate was almost 3 points lower than it is now. Spending power, which was a concern at the height of the inflation crisis, is now bouncing back as inflation recedes. However, not only are households not spending this extra disposable income, or not yet at least, they are not investing in their accommodation either (the market for existing property and new builds remains at a low ebb). Most of this extra household income is therefore channelled into financial savings products, which together with other investments account for almost half of total household savings in both France and Germany. Indeed, the sums pumped into financial savings products have now reached an unprecedented level (lockdown period aside). Saving helps to finance certain needs and can therefore be seen as a way of preparing for the future (the glass half-full view). However, it can also be interpreted as being the postponement of a purchase (the glass half-empty view). One could even consider that a part of these efforts to save is structural, particularly when we consider the reduction over the last 5 years in the proportion of disposable income devoted to purchases of all kinds, be it food, energy, nonfood products (textiles, toiletries, etc.), household goods and transport (including cars). A certain proportion of these spending reductions (nearly a third in France) has gone into the purchase of services (which has partially replaced the consumption of goods, e.g., food services rather than in-store purchases), but most have gone into bolstering people’s savings. According to the latest household economic surveys, these behaviours are set to persist, therefore most of the spending reductions in question will be long term. While the lowering of interest rates, which is set to continue, should encourage households to spend a little more, savings rates are likely to remain almost 2 points above the 2019 level at the end of 2025, limiting the prospects of a pick-up in demand.
Stéphane Colliac