What drives saving behaviors?
Generally, people save money for future consumption, unforeseen emergencies, and retirement. However, attitudes towards saving are determined and influenced by several factors, mainly institutional and socioeconomic environment, demographics, income, employment security, consumer confidence, taxation, and interest rates. For this reason, saving behaviors vary greatly across countries, regardless of their economic development. This becomes particularly evident when looking at saving rates in the European Union. For instance, in 2019, the net saving rate amounted to 10.8 percent in Germany, while it was equal to two percent in Spain.
Savings during the coronavirus (COVID-19) outbreak
During the COVID-19 outbreak, savings reached unprecedented heights across the world. Due to reduced spending opportunities and generalized insecurity about the future, particularly in terms of employment, individuals worldwide started saving more money. In the European Union, saving rates in the second quarter of 2020 were generally high in all the member states and reached peaks of over 25 percent in countries like Germany and the Netherlands. This led to a considerable amount of money lying idle in bank accounts. Estimates published at the beginning of 2021 show how citizens in the wealthiest economies worldwide accumulated excess savings worth billions of dollars throughout 2020.