Rising Savings Rates Signal Economic Caution Amidst Stalled Growth in France
French households save 18.8% of their incomes amid declining economic growth, reflecting increased caution in consumer behavior.
Key Points
- • Savings rate peaked at 18.8% in Q1 2025, pending decline to 18.2%.
- • Projected GDP growth of only 0.6% for 2025 due to decreased consumer confidence.
- • 70% of households are limiting their consumption amidst economic uncertainty.
- • Unemployment expected to rise to 7.7% by December 2025, with job losses of 210,000.
In early 2025, French households exhibited an unprecedented savings rate of 18.8% of their incomes, a record high since the COVID-19 pandemic, according to the National Institute of Statistics and Economic Studies (INSEE). This notable increase in savings is reflective of declining consumer confidence, particularly after the dissolution of the National Assembly in June 2024, which has led 70% of households to cut back on expenditures. This shift in consumer behavior is expected to contribute to subdued economic growth projections of just 0.6% for the year, a decline from 1.1% in 2024.
The increasing savings rate stems from a mix of economic uncertainty and skepticism towards government decisions following political instability. Wealthier households are indicating a preference to save for real estate investments, while lower-income families focus on building emergency funds. While the INSEE anticipates a slight decrease in the savings rate to 18.2% by the end of 2025, this might provide a modest boost to consumer spending, though apprehensions remain regarding the potential adverse effects of forthcoming budgetary measures on spending and investment. The unemployment rate is predicted to rise to 7.7%, equating to an estimated 210,000 job losses by December 2025.