World Savings Day – after the storm?

Although consumption is rising and savings rates decreased from the peaks reached last year, they are still far higher than pre-pandemic levels. In the first quarter of 2021, the household savings rate was 21.5 per cent in the euro area - compared with the pre-pandemic normal of 11-15 per cent.

However, if you drill beneath the surface of these figures, there is serious inequality beneath. As the pandemic divided the financial fortunes of consumers, with those in low incomes more likely to experience job instability and financial hardship, which is reflected in their savings patterns.

Low income consumers are struggling

In 2020, Intrum's annual European Consumer Payment Report surveyed more than 24,000 European consumers and found that 76 per cent are still able to save each month, similar to 2019. However:

1. 56 per cent are dissatisfied by the amount they are able to put away

2. Only 14 per cent are saving more than they were before the COVID-19 crisis

3. 43 per cent of those on low incomes are saving less than they were before.

Higher income households have benefited far more from the financial side effects of the pandemic. Faced with stable incomes but decreased opportunities to spend their money in areas of leisure and travel, they have been able to add to their savings pots.

On the other side of the spectrum, some have needed to borrow more to pay their bills, with 61 per cent doing so each month, far higher than in 2019 when this figure was 52 per cent.