High interest rates since 2022 and a cautious consumer approach to finances in the wake of the cost of living crisis have discouraged borrowing and incentivised saving. As a result, European household savings have been at their highest rate in years, with savings in the eurozone surpassing pre-pandemic levels. Data from Eurostat shows that the average savings rate reached 15.6% in Q2 2024, up from 15.3% in Q1 and far below the pre-pandemic average of 12.3%, as economic insecurity and consumer cautiousness remain.

While we expect lowering interest rates to support household spending a little and savings to be drawn upon by some consumers to stabilise spending while the effects of high inflation persist, structural changes in the economy mean the savings rate is expected to have shifted to a permanently higher level since the pandemic.

On a global stage, European savings rates are now higher than in the US, as US consumers have begun spending at a faster rate post-pandemic. While not directly comparable, the personal savings rate in the US decreased to 5.2% in Q2 2024, below the 5.4% recorded in Q1 and the 6.1% pre-pandemic average. A weaker economic landscape and ongoing geopolitical instability will likely keep consumers and employers cautious, with Europe facing heightened insecurity due to the recent escalation of conflict in the Middle East.

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