French households accumulated considerable savings during the containment period, and this trend has not been reversed since decontainment. Savings which, if spent, could halve the economic losses linked to the coronavirus, according to the Observatoire français des conjonctures économiques.
75 billion euros in savings in 16 weeks
During the period of confinement, households saved mainly in their Livret A passbook accounts. By measuring the difference between net investment flows and net debt flows, the Banque de France was able to estimate the total amount of these savings at 55 billion euros during the confinement, up to the end of April.
In detail, this amounts to 48.8 billion euros in net flows from deposits and cash, and 4.5 billion euros in deleveraging. A further 20 billion euros were added to these savings during the deleveraging period, for a total of 75 billion euros. The Banque de France has also noted fewer new loans, both for home loans and consumer credit.
Savings representing 3.3 points of gross domestic product
According to figures from the Observatoire français des conjonctures économiques (OFCE), these savings represent 3.3 points of GDP, or half of the 6.6 points lost by the French economy during this period.
If all these savings were spent, they could cut losses by half. This is food for thought for public authorities, banks and economists. The latter have put forward a number of ideas, including taxing savings or introducing a special savings scheme. Éric Woerth, Chairman of the French National Assembly's Finance Committee, has even raised the possibility of a "Livret C" savings account, which could be used to finance an investment plan for businesses.
At present, nothing has yet been decided, and the French are still in a precautionary savings pattern. Many of them, starting with the self-employed, have suffered significant financial losses, and the current more-than-questionable economic climate is a call for caution. All the more so as the country is not immune to a second epidemic wave, which could have catastrophic economic consequences.