Savings in Europe

In the present climate, private investors are opting for lower-risk investments. Around 50% of Europeans have short-term savings deposits and almost every other person has invested in life insurance or pension funds. In the USA, shares and share-based investments continue to be the most popular form of investment, although this trend is clearly on the decline. These are the findings of the recent Investment Barometer, carried out by GfK on behalf of The Wall Street Journal Europe.

European investors are continuing to take a rather cautious approach to stocks and shares, a trend which began last spring. At the time, thirteen per cent of all respondents cited stocks or share-based investment funds as the most important form of investment, whereas now this figure has dropped to nine per cent. In western Europe, this value fell by five percentage points from sixteen to eleven, in Germany from nine to eight per cent. In answer to the question of how European private investors would invest EUR 50,000, one in four replied that they would choose a short-term savings option. Fifteen per cent would opt for life insurance or pension funds, and only twelve per cent for stocks or share-based funds. This means that the number of people who would invest in shares has reduced by 40 per cent compared to spring 2002. This decline is even more marked in Germany: whereas six months ago, 24 per cent of Germans would have invested in shares or share-based funds, currently only half this many would choose this as their preferred investment option. Americans have a more positive attitude in this regard (21 per cent), as do Swedes (24 per cent) and Britons (19 per cent).

This trend of private investors shying away from share-based investments coincides with a boom in short-term savings deposits. One in two Europeans admitted to having recently placed their assets in short-term savings, as was the case last spring. In Germany, too, around half of all private investors have short-term savings, although there are the first signs of success of the German Government's campaign to get people to invest in private pensions. Whereas in spring 2002, 47 per cent of German private investors said that they were building up assets by means of life insurance or pensions, six months later, the figure amounts to 52 per cent.

With regard to which types of investment European investors have favoured in the last six months and which they have turned away from, the picture for shares or share-based investments looks generally bleak. Both Europeans and Americans have become less inclined to invest in the stock market in the past few months. Almost one in ten private investors in Europe replied that they had reduced their share investment volume in the last six months, and in the USA, this figure even reached 16 per cent of respondents. In Europe, the number of people favouring shares dropped significantly, particularly in Sweden (down by 43 per cent), Belgium (down by 28 per cent), the Netherlands (down by 21 per cent) and Italy (down by 18 per cent).

Whereas European private investors are increasingly placing their trust in life insurance and pension schemes (plus five per cent), in the USA there is a clear rise in lower-risk short-term savings deposits. 14 per cent of the American respondents said that they had invested more money in this type of saving since spring.

As in the other European countries, less private money has been invested in shares in Germany in the last half year (minus six per cent). In line with the general European trend, Germans are also increasingly turning to life insurance and pensions as a means of investment (plus seven per cent). This may be attributable to the fact that insurance companies have stepped up their activities as a result of the 'Riester pensions'.

The proportion of people who claimed in the autumn survey that they will be able to save just as much in the coming year as over the past twelve months has decreased from 48 to 41 per cent compared with the spring survey. The number of pessimists has increased: whereas in spring, one in four Europeans said that they would not be able to save as much in the near future, by autumn 2002 it was already one in three. In Germany, Portugal and Italy, as many as 50 per cent take this pessimistic view. The fact that there is no increase in optimistic savers, i.e. those who think they will be able to save more in future, in any of the western European countries is a clear indicator that there are no signs of a change in the current negative trend.

The Investment Barometer survey is carried out twice a year and provides information about the investment behaviour of European consumers. Questions include the current investment situation of respondents and how they would invest EUR 50,000. The most recent survey also covers the investment types which are currently favoured by private investors, as well as those in which they have reduced their investment. The latest survey was carried out by GfK Ad Hoc Research Worldwide on behalf of The Wall Street Journal Europe between 1 October and 22 November 2002, and comprised a total of 12,471 people in 15 countries. The present survey also includes data for the USA, Russia and Portugal for the first time.

All articles 2006-23 written and edited by Mel Crowther and/or Nick Thomas unless otherwise stated.

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