An analysis by the Hamburg-based financial institution Deposit Solutions shows that an additional € 585 billion was credited to euro area current and savings accounts last year, which shows that its residents have reduced their spending due to the coronavirus and lockdown. As a result, their savings almost halved compared to the situation in 2019, which amounted to 395 billion euros.
Economical like a Brit
A significant part of the new money in the accounts, amounting to around 150 billion euros, goes to the Germans. Their savings increased by 37 percent compared to 2019. It was higher than in Italy (32 percent) but lower than in France (72 percent) and Spain (38 percent). In the UK, which was surveyed separately, the increase in savings was even greater, at a whopping 170 percent.
The authors of the analysis state that from the second quarter of 2020, the inflows of money in savings accounts were higher than in previous years. As a result, at the end of last year, around EUR 8.3 trillion in total was deposited in them in the euro area. The analysis covered all types of savings accounts in the zone.
“The decline in consumption and the continued uncertainty over economic developments have made people put more money in their accounts than ever before,” the head of Deposit Solutions said. Tim Sievers also emphasized that the same trend prevails in all European countries: savings deposits play an increasingly important role in the financial portfolio of Europeans.
Monetary resources at record levels
In the euro area, in 2020, the financial resources of the French, who set aside statistically around EUR 2,200 in their savings accounts, increased the most. The second place was taken by the Germans, who saved EUR 1,800 per capita, and the third – by Italians and Spaniards, with EUR 1,300 of additional savings per statistical inhabitant of these two countries.
For the purposes of the analysis, the British consulting company Barkow Consulting examined, among others, the data of the European Central Bank and the Bank of England. In the UK, savings on the account increased by 2,500 euros per capita. This has proved to be an additional problem for many banks, as they have to pay negative interest rates to the European Central Bank for savings on their accounts. The savings banks, flooded with additional money, complain the most about this. Many banks have introduced penalty interest or additional fees for maintaining savings accounts, or they intend to introduce such a solution.
Deposit Solutions acts as an intermediary in making money from savings accounts available to its partner banks. Some of them are located in the countries of Southern and Eastern Europe. As they offer higher interest, their offer is particularly attractive these days. Deposit Solutions partners include, inter alia, Paypal creator Peter Thiel and Deutsche Bank.
The increase in savings in a pandemic is nothing new. According to the data of the Federal Statistical Office, savings increased by 16.3 percent in 2020 compared to 10.9 percent in 2019. In practice, this means that in a statistical household in Germany, for every EUR 100 of income on average, EUR 16 was set aside. .
The high level of savings also increased the financial resources of the Germans to a record level, say analysts from DZ Bank. Germans prefer not to spend money for fear of unemployment or part-time work. In addition, lockdown limits the possibility of spending them in restaurants and hotels. DZ Bank talks about an “extraordinary high level of savings”.
Equities are also enjoying increased popularity in the pandemic, but the most savings are still impacting bank checking accounts, despite low interest rates.
The article comes from Deutsche Welle.
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