Faced with inflation, the French want to save more but are unable to do so

(BFM Bourse) – Faced with the shock of inflation, the aspiration of households to save remains very high, but they concede that they are having difficulty feeding their woolen stockings. Their choice remains blurred by inflation and changes in the remuneration of regulated savings products (Livret A, LEP, etc.), according to the BPCE Observatory.

The French are no exception to their reputation as “ants”, and the recent rise in prices has become one of the main reasons for saving, notes the latest study by the BPCE Observatory. The desire of French households to put money aside remains at its highest, especially as it is also fueled by long-term concerns (retirement, rising public debt, etc.). But at the same time, the French have never been so pessimistic about their ability to save since the beginning of 2019, a pessimism which particularly affects the most modest households with inflation, adds the study.

A savings rate expected above 16% in 2022

For BPCE economists, the French savings rate would remain close to 16.2% in 2022, then should decrease slightly to 15.8% in 2023, after 18.7% in 2021 and 21% in 2020. This rate savings would however remain significantly higher than the pre-Covid average (between 14 and 15%). “It is true that the recent rise in the savings rate has mainly been due to well-to-do households, whose propensity to consume is lower than the average”, notes the study, which adds that “the insufficiency of returns, especially if higher inflation erodes the real value of their financial assets, pushes them to maintain even more abundant savings as these wealthy people anticipate future tax increases, in the face of the drift of public finances”.

According to this same barometer, new financial investments will gradually continue to decline, going from 111 billion euros in 2021 to 89.6 billion euros in 2022. In 2023, they should represent a total amount of 66.7 billion euros. This decline would come after an absolute record of 149.3 billion euros in 2020. According to the Observatoire BPCE, this decline is explained, on the one hand, by the decline and then by the weakness of household purchasing power, and on the other hand, by the expected slowdown in the distribution of mortgage loans, accentuated in 2023. at a slower rate, in 2022,” the study adds.

Collection favored by booklets, and in particular by the increase in the LEP rate

Concerning the arbitrations on financial investments, the benchmarks of French households remain, according to BPCE, “blurred both by the return of inflation and by the still limited increase in regulated rates which are still far, at 1%, from the psychological threshold of likely to trigger significant arbitrage and which is close to 2.5%”. But the regulated passbooks should find new impetus with the rise in the rate of the Livret A (2%) and the Livret d’épargne populaire (LEP) to 4.6% on 1 August. Regulated booklets will also continue to benefit from the outflow movement on the PEL, the latest generation of which offers a net remuneration of taxation (0.7%) much lower than that of the Livret A.

For its part, life insurance is mainly benefiting from the momentum of unit-linked products, the momentum of which is also fueled by retirement savings plans (PER). “In a context of strong appetite for preparing for retirement, currently reinforced by the uncertainties associated with the government’s pension reform project, net inflows, excluding transfers to insurers’ PERs, represent the equivalent of 28% of inflows. net of life insurance for a year”, explains BPCE. In addition, unit-linked products are also benefiting, according to BPCE, from a limited but gradual decline in risk aversion in an economic climate considered generally unfavorable for the stock market, leading to a transfer of securities flows to the unit-linked life insurance for 18 months.

For BPCE economists, the trade-offs between financial products, which are still guided by a wait-and-see attitude, the search for security and availability to the detriment of risk, should therefore be disrupted by the scale of the sudden changes in regulated rates in 2022 and 2023. They also mention “the effect of the surge, perceived by households, of inflation, whether it is the Livret A and especially the LEP”. In particular, the collection of the LEP could even exceed the forecast economists of the bank – expected at 7.2 billion euros in 2022 – because its return (4.6%) is now well above the psychological threshold of remuneration of 2.5%.

Sabrina Sadgui – ©2022 BFM Bourse

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