A study published by the European Savings Observatory (OEE) reveals that the French, like their European neighbors, have been strongly impacted by inflation. Purchasing power, capacity and value of savings or recourse to credit… the rise in prices spares nothing and no one.
Rising prices have a strong impact on the purchasing power of households throughout Europe. Annual inflation there reached 7.5% on average, revealed the European Savings Observatory (OEE), in a study published on Thursday 11 August. Despite a increase in gross disposable income (+1.3% on average in the first quarter of 2022), the purchasing power is down sharply. Even in France, where the implementation of the tariff shield on energy prices has limited the effects of inflation, the rise in prices remains higher income growth gross available annualis (4.1%).
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A general decline in savings capacity
Who says loss of purchasing power says lower savings capacity. Thus, according to the OEE, household savings rates at an annualized rate fell for the fourth consecutive quarter in all the countries under review. A drop of 1.6% (on average) in the first quarter of 2022, compared to -1.4% during the last three months of 2021. When French people save an average of 16.5% of their income, Germany has the highest savings rate (21.5% of their annualized gross disposable income).
The value of the heritage of Europeans is falling
The value of the financial wealth of European households has decrease of 2% on average in the countries under review in the first quarter of 2022. The cause? Negative valuation effects on equity asset classes, especially listed equities (-4.4% on average) and lower new investment flows. But this decline was partly offset by numerous investments in more risky vehicles, such as shares or units of account via life insurance. According to this study, life insurance portfolios were more impacted by declines in the financial markets than portfolios invested in pension funds. In France, the United Kingdom and Italy, the positive outstandings in life insurance did not offset the declines in valuation which reached -3.6% on average (for life insurance and pension funds) .
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While the value of financial wealth is falling, growth in household financial wealth remained positive in all the countries under review (+2.6% on average), except in the United Kingdom (-1.5%), reports the study.
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The French have recourse (more than the others) to consumer credit
The French save less than some, but borrow more. According to the OEE, the average increase in outstanding loans was 0.5% on average in the first quarter of 2022 and 1% over one year. But it is in France that the strongest annual growth is observed: +2.4%. Belgium and Italy are the only countries where it continues to fall.
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