Key to Europe's economic recovery: unlocking consumer spending

Strict COVID-19 lockdowns limited spending opportunities for households around the world earlier this year, including those in Europe. This lapse in consumption resulted in a surge in the Euro Area’s savings rate to a record high of 25 percent of gross disposable income in Q2 2020 (vs. 13 percent a year earlier). Since lockdowns have been lifted, however, savings rates have remained high. This is because half of Euro Area consumers are worried about their jobs—a legitimate concern as furlough schemes come to an end in a number of countries. Looking ahead, renewed mini-lockdowns throughout Europe in Q4 due to the surge in new COVID-19 cases, coupled with anxieties about joblessness, are likely to keep savings rates high. This, in turn, will continue to hinder consumer spending and potentially delay the European economic recovery.