Over the ten years from 2013 to 2023, EU household (personal) savings grew by 56.1%, from 23.35 to 36.45 trillion EUR (current prices). We expect the trend of savings growth to continue in 2024–2025.

In Germany, household savings increased by 3.56 trillion EUR (+72.6%), in France by 2.34 trillion EUR (+52.5%), and in Italy by 1.5 trillion EUR (+37.8%).

The largest relative increase in household savings over the past 10 years was recorded by rapidly developing Bulgaria (+166.8%), Romania (+134.2%), Lithuania (+164.7%), Estonia (+154.3%), and the Czech Republic (+133.9%).

In the structure of EU household savings in 2023, the leaders were Equity & Investment Funds (35.6%), Insurance, Pensions & Guarantees (27.5%), and Currency & Deposits (31.1%).

Equity & Investment Funds include investments in stock-exchange-listed shares, non-listed shares (enterprises), and investments in investment fund shares/units. The growth of this category reached 9.3 percentage points (pp).

The key growth factor was the spread of FinTech solutions: investments in equity markets have become more accessible and convenient for a broader range of market players. Also, according to our analyses, in recent years, investment growth has been greatly supported by the development of new activities driven by the acceleration of the IT sector and the penetration of Big Data (BD), AI, and ML technologies across almost all B2B and B2C industries, facilitating the launch of new startups and ideas (more details in the next CDP analytical review).

We believe that the growth of this category indicates overall improvement in welfare and an increased risk appetite among households: investments in stocks are riskier than deposits and bonds while still providing a higher yield.

The increase in Equity & Investment Funds occurred primarily due to a moderate redistribution of assets from debt securities (from 6% to 2.5%) and from Insurance, Guaranteed, and Pension Funds (from 31.7% to 27.5%).

The decrease in investments in debt securities was associated with a broader decline in rates by the European Central Bank due to the Quantitative Easing (QE) policy from 2015 to 2020. However, in 2022–2023, against the backdrop of inflation in the Eurozone, ECB rates rose, which led to a partial recovery in the popularity of bonds in the EU toward the end of the period.

The structure of household savings assets differs significantly across EU countries, which is influenced by the general structure of each country's economy and the preferences of its population.

For example, in 2023, in Cyprus, Greece, and Poland, more than 50% of savings were kept in cash and deposits (56.2%, 52.9%, and 51.8%, respectively).

Estonian households allocated more than 71.7% of their savings to Equity & Investment Funds (primarily due to investment-incentive tax policies and the high attractiveness of the SME sector). The share of Equity & Investment Funds in household savings in Bulgaria reached 53.8%.

Savings placed in Insurance, Pensions & Standardized Guarantees in the Netherlands accounted for 55.9% (€1.7 trillion), in Ireland 44.7%, and in Denmark 40.8%.

The leaders in the use of Securities, Derivatives, and Loans as a means of saving were Hungary (17.7%, mostly Long-term debt securities) and Malta (16.2%).

At the same time, the largest economies (Germany, France) demonstrate relatively balanced household savings portfolio: the volume of savings in currency & deposits was comparable to Equity & Investment Funds, as well as Insurance, Pensions & Guarantees. In Italy and Spain, the distribution is shifted in favor of equity investments, while in the Netherlands, it favored Insurance, Pensions & Standardized Guarantees.

Active financial instruments (investment funds, shares, securities)

We see a similar pattern in the population's habits when analyzing the use of active financial instruments for household savings (such as stocks, bonds, and investment funds).

On average, 48.1% of active financial instruments consist of Investment Fund shares/units. The total savings of EU countries placed in Investment Funds reach €3.4 trillion, of which 28% are held by households in Germany and 21% in Italy. Investment Funds are most popular in Estonia (77.8%), Spain (72.8%), and Portugal (71.2%) as a share of total savings in active instruments.

Households in Ireland, Bulgaria, and Finland, on the other hand, prefer to independently manage a portfolio of stock-listed shares (61.8%, 55.6%, and 51.6% of active investments, respectively).

In Hungary and Malta, however, the most popular active financial instruments were debt securities (52.2% and 51.9%, respectively).

The dynamics of household savings in publicly listed shares indicate an increase in the popularity of the instrument by 0.7 percentage points (pp) of total savings. At the same time, the growth of savings placed in listed shares was recorded in 22 out of 28 countries. The largest increase was recorded in Greece (from 1.1% to 3.8%), Cyprus (+2.1 pp), and Estonia (+2.1 pp).

In absolute terms, the largest increase in savings placed in listed shares was seen in Germany (+300.4 billion EUR, +1.6 pp) and France (+139.9 billion EUR, +0.7 pp); together, they accounted for 57% of the increase.

The dynamics of household savings in investment funds indicate an increase in the popularity of the instrument by 2 percentage points of total savings. At the same time, the growth of savings placed in investment funds was recorded in 21 out of 28 countries. The largest increase was recorded in Estonia (from 0.9% to 12%), Belgium (+6.6 pp), and the Czech Republic (+6.3 pp).

In absolute terms, the largest increase in savings placed in investment funds was seen in Germany (+547.8 billion EUR, +2.9 pp). A high growth rate was also observed in Spain, recovering from the 2008–2013 crisis (+6.1 pp, an increase from 9% to 15%, +250.7 billion EUR), and Italy (+276.2 billion EUR, +2.0 pp). Germany, Italy, and Spain together accounted for 65.3% of the increase.

The dynamics of household savings in debt securities (both short and long term debt), on the contrary, shows a decrease in the popularity of the instrument by -5.2 pp from total savings. At the same time, the growth of savings placed in debt securities was recorded in 7 countries out of 28.

Almost all countries that showed a decrease are in the Eurozone, i.e. experienced a decrease in ECB rates, which led to a decrease in the popularity of the instrument. The largest increase was recorded in Hungary (from 7.6% to 14.2%), Cyprus (+2.8 pp) and Estonia (+2.7 pp).

The dynamics of household savings in unlisted shares shows an increase in the popularity of the instrument by 2 pp. from total savings (primarily against the background of a period of low ECB rates). This indicator shows investments in real business, primarily SME capital, but at the same time they are quite risky, but also profitable assets for households. At the same time, growth in savings placed in unlisted shares was recorded in 19 countries out of 28. The largest increase was recorded in Denmark (from 14.3% to 12%), Malta (+8.4 pp) and Italy (+6.3 pp). In absolute values, the largest increase in savings placed in unlisted shares was shown by France (+559.6 bn, +5.4 pp) and Italy (+463.9 bn, +6.3 pp): together they provided 54.2% of the increase.

In conclusion, the forecast for trends in 2024–2026:

Inflation stabilization and a reduction in the key rate will support the trend of growth in traded and non-traded shares and investment funds.

The new EU policy aimed at stimulating private investment in innovative sectors of the economy may significantly increase investment in investment funds and traded shares.

If incentives are adopted at the EU level to attract pension funds as institutional investors, we also expect an increase in returns from pension savings in the medium and long term.

‍

Tags: household savings, fintech, trends, shares, securities, equity, investments, currency, deposits, risk appetite, pensions, derivatives