2023-06-28 11:06:32
Will the French over-save permanently? For three years, in any case, they have not failed in their reputation as ants. In the first quarter, the household savings rate represented 18.3% of their disposable income, according to the Banque de France. A level that we had not observed in the early 1980s – except in 2020 and 2021 due to the confinements linked to the pandemic – and higher by more than 3 points than it was in 2019 before the eruption of the Covid .
Despite soaring prices, French people worried about the future have tightened their belts to increase their precautionary savings. After the Covid, which filled the woolen stockings, other concerns appeared: the war in Ukraine, high inflation, the deterioration of the economic climate…
Aging of the population
Even if it recovered slightly to 85 in June (+ 2 points), the INSEE indicator which measures household morale remains, as it has for many months, at a level well below its long-term average. Although the French anticipate an improvement in the standard of living in the country and also in their future financial situation, the opportunity to make major purchases in the coming months has dropped by 3 points. On the other hand, more of them want to put money aside.
“The unemployment rate is low, real investment returns such as the Livret A are negative and asset values are high: this should have contributed to a gradual return to normal in the savings rate”, is surprised Mathieu Plane, economist at the OFCE.
To the successive crises, however, would be added structural factors according to Philippe Crevel, founder of the Circle of Savings. The high cost of reimbursing the capital of mortgages (more than half of the savings rate) as well as the aging of the population. “The weight of the over 45s in the population is increasing: these age groups are those who prepare financially for their retirement by saving”, explains the expert, while recalling that “the rise in the savings rate in France had started before the health crisis”.
Disparities
France thus remains one of the European countries where households save the most with Germany. At the end of last year, the average rate in the euro zone stood at 14.1%, up 2 points compared to 2019, according to Eurostat.
At the end of 2022, the level of savings of the French approached 159 billion euros . Cautious, they should maintain this savings rate at 18% over the second half of the year according to INSEE. This even though purchasing power would increase by 0.5% in 2023 (and would stagnate measured in consumption units).
This average rate certainly conceals disparities. “The 20% of the most modest French people who had saved little were forced to dip into their kitty to cope with the price increase”, notes Philippe Crevel.
On the other hand, the wealthiest households, which hold most of the financial savings, do not need them to consume. Hence the risk pointed out by certain economists of seeing their woolen stockings transformed into capital.
Glimmer of hope
This savings rate does not do the business of growth based in France on household consumption, which accounts for more than half of GDP. The INSEE forecasts published on June 15 are enough to alert. In 2023, French spending should fall by 0.2%. Which hasn’t happened since 2012.
However, the scenario of the Institute of Statistics for the coming months is not that of a fall in consumption but that of a modest recovery in household spending (+0.2% in the third and fourth quarter) linked to wage growth and the slowdown in price increases. For some economists, there is also a glimmer of hope: they do not rule out a return to ante savings behavior when inflation finally subsides.
A possible drop in the savings rate “would be likely to support consumption”, observes INSEE in its latest economic report. By spending more, households would in fact contribute to restoring momentum to GDP, while forecasters predict sluggish growth in 2023 and 2024 . “For that, the French will have to regain confidence in the future,” observes Mathieu Plane. According to Philippe Crevel “the hypothesis of a return to the savings rate of 15% is however unlikely”.
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