ING economists Marieke Blom and Amrita Naik Nimbalkar say in a report that if
euro-area household saving rates fell back to pre-pandemic averages, it would
release demand equal to about 1% of GDP. Household saving was 14.3% of
disposable income in Q1 versus a five-year pre-pandemic average of 12.5%. If
savings dropped to the US level of 10.2% (US Q4 2025), the euro-area GDP boost
could approach 2%. Higher mortgage rates, slower credit growth and elevated
precautionary savings are likely to keep consumption weak, but a shift from bank
deposits into investments could underpin stronger spending and domestic demand
over the coming years.
