Editorial & Advertiser disclosure

Global Banking and Finance Review is an online platform offering news, analysis, and opinion on the latest trends, developments, and innovations in the banking and finance industry worldwide. The platform covers a diverse range of topics, including banking, insurance, investment, wealth management, fintech, and regulatory issues. The website publishes news, press releases, opinion and advertorials on various financial organizations, products and services which are commissioned from various Companies, Organizations, PR agencies, Bloggers etc. These commissioned articles are commercial in nature. This is not to be considered as financial advice and should be considered only for information purposes. It does not reflect the views or opinion of our website and is not to be considered an endorsement or a recommendation. We cannot guarantee the accuracy or applicability of any information provided with respect to your individual or personal circumstances. Please seek Professional advice from a qualified professional before making any financial decisions. We link to various third-party websites, affiliate sales networks, and to our advertising partners websites. When you view or click on certain links available on our articles, our partners may compensate us for displaying the content to you or make a purchase or fill a form. This will not incur any additional charges to you. To make things simpler for you to identity or distinguish advertised or sponsored articles or links, you may consider all articles or links hosted on our site as a commercial article placement. We will not be responsible for any loss you may suffer as a result of any omission or inaccuracy on the website.

Finance

Euro zone savings rate dips in Q3 but stays exceptionally high

Published by Global Banking and Finance Review

Posted on January 13, 2025

Featured image for article about Finance

FRANKFURT (Reuters) - Euro zone households reduced their savings a touch in the third quarter of last year but still set aside an exceptionally large portion of their disposable income, highlighting a key challenge holding back growth, data from Eurostat showed on Monday.

The euro zone savings rate dipped to 15.3% in the third quarter from 15.6% three months earlier, the first decline since early 2022, but stayed well above the 12-13% range prior to the pandemic.

Euro zone households have been saving up an unusually large portion of their incomes over the past several years, trying to rebuild some of their real wealth lost to inflation.

This has kept consumption weak and the overall economy barely growing, dashing hopes that household largesse will drive the recovery, more than offsetting the drag from a multi-year industrial recession.

This is in stark contrast with the United States where the personal savings rate was at 4.4% in November, below the historic average and trending down as families remain comfortable with their employment prospects.

While the European Central Bank is still betting on a consumption recovery, it admitted last week that household savings could remain unusually high in the near term, partly due to political and economic uncertainty.

The savings dip was used by households for personal consumption rather than investment, Eurostat added, a fact likely reflected in modest increases in retail sales over the summer quarter.

Consumption expenditure rose by 1.1% on the quarter but investments into fixed capital, which consists mostly of home purchases or renovations, slipped to 9.1% of disposable income from 9.2%, a level that is well below historical trends.

Eurostat also said corporate profitability increased in the quarter after a steady decline since the start of 2023.

(Reporting by Balazs Koranyi, editing by Ed Osmond)