The high inflation of 2022 has significantly reduced the savings of Germans. As the Bundesbank pointed out on Friday in its analysis of financial asset accumulation in the fourth quarter, household savings plummeted from €375 billion in 2021 to €289 billion in 2022, confirming surveys among savers, with an increasing proportion reporting that they have no money left to save due to the increased cost of living.
Daniel Mohr
Editor in business.
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Over the course of the year, however, the deficit in savings has narrowed. Immediately after the start of the war in Ukraine and the rapid rise in oil and gas prices, savings plummeted by a good 30 percent. In the course of the year, the decline was reduced to 11 percent in the fourth quarter, in parallel with the renewed decline in energy prices. On average for the year, savings decline of 23 percent remains. Since statistics began in 1999, there has only been a sharper decline in 2000.
Within the area of savings generation, priorities have shifted significantly. This is where the turnaround in interest rates is having an effect. Until the summer, fixed-term deposits were not in demand, as in previous years, and savers withdrew money. After the first interest rate hike by the European Central Bank (ECB) in July, the tide turned. In the fourth quarter, fixed-term deposits were the most sought-after asset class with inflows of 28 billion euros and thus 40 percent of total savings.
This replaced the traditional favourite of German savers: cash and overnight demand deposits (overnight money and current accounts). There, another 10 billion euros flowed in. According to observations by the Berlin-based interest broker Raisin with the platforms Weltsparen and Zinspilot, this trend will continue in 2023. In the case of fixed-term deposits, interest rates have already risen more significantly than in the case of overnight money. FMH-Finanzberatung has recorded an increase in interest rates for fixed-term deposits for one year from 0.1 percent at the beginning of 2022 to 2 percent now. Some providers already offer 3.5 percent.
In the bond segment, too, there was an inflow from private investors of 12 billion euros after years of slump, which the Bundesbank describes as an "extraordinary amount". The inflow into equities, funds and insurance continued at a slower pace. Overall, financial assets fell to 2022.7 trillion euros in 25 due to price losses for shares and bonds.
The comparison with the previous year is distorted by newly applied valuation methods for entitlements from pension contracts. At the end of 2021, a record of just over 7.6 trillion euros in financial assets had been reached. However, more than 300 billion euros of the decline are due to valuation and not losses for investors.