On average, Germans saved more of their income in the first three months of this year than ever before - at least since these figures have been collected in recent years. That is according to data presented by the Federal Statistical Office on Monday. According to the data, the savings rate of private households rose to 23.2 percent in the first quarter. That exceeded even those 20.5 percent from the second quarter of last year from the first lockdown. The savings rate had then fallen over the rest of 2020, before it now shot up again. "The savings rate is continuing its roller coaster ride," said Michael Stappel, economist at DZ Bank.

Research has shown that involuntary saving due to Corona restrictions is the most important reason for the increased savings rate in the pandemic, rather than precautionary saving. In addition, older people and people with higher incomes in particular save relatively more in Corona times. Large portions of these savings are expected to be spent again after the pandemic, boosting the economy. The extent to which that will happen, however, is a matter of debate among economists. "With the easing of the lockdown, the combination of solid income growth and a lower savings rate will give consumption a decent boost," Deka economist Andreas Scheuerle said. "However, some of this could be carried abroad as a result of holiday-related travel."

According to the trade union-affiliated Macroeconomic Policy Institute (IMK), German private households saved around 100 billion euros more last year alone than would have been the case without the pandemic. Particularly in the upcoming second half of the year, many households are likely to make up for this pent-up demand, IMK Director Sebastian Dullien expects. "Some of it is then likely to flow into additional consumption."

DZ Bank economist Stappel said, "Driven by the Corona crisis, the savings rate already shot up to 20 percent in the second quarter of the previous year, by far the highest level since reunification." During the rest of the year, he said, the share of income that households put aside was significantly lower, but still remained well above the average of previous years. According to the latest figures from the Federal Statistical Office, the savings rate in the first quarter has now thus once again reached a historic record of 23.2 percent. "The seasonally highly fluctuating savings rate always turns out to be high in the first quarter anyway, and this year the hard lockdown was added to the mix," Stappel said. High savings rates also existed in Germany during the oil crises, he said, but the statistical figures are not comparable with today's.

Even if the current quarter is characterized by gradual easing of the Corona measures, citizens are still saving a lot, said economist Stappel. However, this is likely to change when shopping, gastronomy, culture and vacations are possible again without major restrictions as the vaccination progresses. "In the course of the second half of the year, the savings rate should even fall well below the long-term average," the economist believes. Funds for strong consumption would be available. After all, he says, private households saved more than EUR 150 billion extra in 2020 and the first quarter of 2021 combined, most of which was parked temporarily in checking accounts. "A significant portion of this additional savings is likely to be used to make up for lost consumption and thus boost the economic recovery after the Corona crisis," said Stappel: "Only in the course of next year should the private savings rate then turn back toward normal levels."

Image by Kevin Schneider