As a result of the Covid-19 crisis and successive lockdowns, European households have built up gross savings over the past year that are 50% higher than pre-crisis, according to a study by global leader in trade credit insurance Euler Hermes (Allianz). According to the economists' calculations, the excess savings amount to EUR450bn, or almost 5% of Eurozone GDP. For Belgium, Euler Hermes estimates the additional gross savings of households at nearly EUR20bn in 2020.

According to the trade credit insurer, 40% of the surplus savings are held by the richest 10% of households, 50% by the upper middle class and 10% by other households.

Evolution of households’ gross savings in 2020, EURbn
The trade credit insurer expects a double positive effect for the European economy: first, euro area households should generate a considerable increase in consumption as the various sectors of the economy reopen. Euler Hermes estimates this consumption boom at EUR170bn (or 1.5% of Eurozone GDP) in 2021. Euler Hermes' economists expect an increase in consumption by Belgian households of around EUR7bn.
Pent-up consumption vs. remaining excess savings in 2021, EURbn
A second positive effect of euro area households on the economy could be generated by the activation of excess savings (more than EUR300bn in 2020 and potentially an additional EUR200bn following the lockdowns in H1 2021) that are today mainly in bank accounts, according to Euler Hermes. Indeed, two thirds of households' excess financial assets ended up in bank accounts, while the remaining third was invested in the capital markets, mainly in equities, clearly indicating a new interest in risky financial assets during the pandemic.
However, there is a better way to make use of these excess savings to the benefit of savers, the financial markets and economies alike, said Ana Boata, Head of Macroeconomic Research at Euler Hermes.

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