Lower Consumption, Government Support Drive Euro-Area Savings Higher

(Bloomberg) -- European governments have pumped huge sums of money into the economy to get workers through the Covid-19 crisis and Bloomberg Economics estimates that household income was only 5% below its pre-pandemic level in the second quarter in the euro area’s four largest economies -- without furlough programmes, generous unemployment benefits and support to the self-employed, it would have fallen by 13%. With restaurants and shops shut, consumption likely dropped by much more than income and BE estimates that many households now have more in savings than before the outbreak. Providing the region avoids a second wave of infections, consumers in most parts of the euro area will help drive the recovery in the second half of 2020.

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