At the end of October, the surplus savings accumulated by French households since the start of the health crisis totalled 187 billion euros. While the French continue to over-save, the trend is downwards. In Q3 2021, the savings surplus increased by 6 billion euros, compared with 22 billion euros in Q2.
A surplus of savings useful for the economy
Thesavings surplusof French households continues to grow, as it has since the start of the Covid-19 epidemic. At December 31, 2020, this surplus stood at 111 billion euros. Amounts saved above the usual savings level reached a total of 157 billion euros at the end of June 2021, then 187 billion euros at the end of October, according to Banque de France data.
Long encouraged by the government to spend these surplus savings to support the economic recovery, the majority of French people preferred to keep these sums in their current accounts or regulated savings accounts, such as the Livret A and the Livret de développement durable et solidaire.
According to Olivier Garnier, Chief Economist at the Banque de France, and Agnès Bénassy-Quéré, Chief Economist at the French Treasury, this surplus of savings has proved very useful for the economy. According to these specialists, thesavings surplus has been used to finance loans to the economy, SMEs, energy transition projects and the social economy.
The sums invested in Livret A passbook savings accounts went into the Caisse des Dépôts et Consignations fund to finance urban policy and social housing programs. Surplus savings were also used to purchase government debt securities and finance the general government deficit.
The savings surplus grows ever more slowly
While the savings surplus continues to grow, the trend is towards a slowdown. In Q3 2021, for example, it rose by 6 billion euros, compared with 22 billion euros in Q2 as a whole.
Consumption rose sharply in the 3rd quarter, but has not yet returned to the levels reached before the start of the health crisis. In addition, according to Insee estimates, household gross disposable income should have risen by 3.9% this year, compared with 1% in 2020. These various factors would explain the persistence of a savings surplus despite the economic recovery.
At the end of October, half of this savings surplus, or 99 billion euros, was invested in interest-bearing passbook savings accounts or bank accounts. Livret A deposits rose by 18.6% between December 2019 and September 2021, representing an increase of 51.5 billion euros in mainland France alone.
If we add regular savings (124 billion euros) to over-savings, total French savings amount to 293 billion euros, 100 billion euros more than a year ago.
According to Insee estimates, the savings rate should fall to 16% of gross income by the end of the first half of 2022, closer to the usual rate (+1 point).
The appearance of the Omicron variant and the fifth wave of the epidemic threaten to undermine the estimates of the Observatoire français des conjonctures économiques, which deemed French growth of over 6% possible if a fifth of the surplus savings were spent by households.