European Consumers Still Aren't Consuming But The Way They Save Is Changing

Eurozone households continue to exhibit high savings ratios that constrain economic growth, though a meaningful reallocation of funds from bank deposits to investment products is underway. This structural change in savings behavior may eventually provide a long-term boost to domestic demand.

Key Takeaways

• 1.Eurozone household savings ratios remain significantly above pre-pandemic levels, acting as a structural drag on GDP growth.
• 2.There is a structural shift in household portfolios, with savings transitioning from bank deposits into investment funds, ETFs, and pensions.
• 3.Older cohorts appear to be drawing down buffers while younger generations report record-high savings intentions, resulting in minimal aggregate change to the savings ratio.

Table of Contents

• The issue: Savings inches down, but still well above historical levels
• The effect: A lack of household spending slows economy
• The surprising driver: older households fearing the erosion of their wealth
• The opposing forces: Younger generations savings intentions peak
• There's never been a better time to save
• The coming quarters: first down, then up
• What’s new: Fewer deposits, more investments
• Investment funds are gaining ground in financial portfolios of households
• The longer-term implication: positive for growth
• Households are holding more of their wealth in liquid investments

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