With fewer ways to spend in lockdown, Germans saved billions in 2020

The Bundesbank has reported that the amount of money held in private German bank accounts increased by 182 billion euros in 2020. According to experts, savings increased due to fewer opportunities to spend in lockdown.

Saving billions of euros

Germany’s central bank, the Bundesbank, has revealed that the amount of money being held in private household bank accounts increased by 182 billion euros between January 2020 and January 2021. This amounts to a total of 1,73 trillion euros.

The ifo Institute for Economic Research has estimated that private households have accumulated a “savings surplus” of over 100 billion euros in the last year, which is likely to rise in the current quarter.

Christian Nau, head of price comparison site Check24, suggests that spending has declined because the amount of credit being offered to consumers has decreased, as lenders are being more cautious. On top of that, due to coronavirus in Germany, shops and businesses have closed, meaning there are fewer opportunities for people to spend their money. "Customers had significantly fewer opportunities to consume," Nau said. "Vacation trips were hardly possible, and even larger acquisitions were not so easy."

The road to recovery

The ifo Institute has predicted that economic recovery will be a gradual process in Germany, although this is based on the assumption that households will not spend their savings during the recovery phase “and that the savings ratio, which had risen temporarily to around 20 percent during the two shutdown phases, will return to its pre-crisis level of 11 percent by the end of 2021."

However, the ifo Institute did concede that there is a chance that German households will spend some of their excess savings, which would drive demand. “The savings rate would then temporarily fall below 11 percent.”