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At 17.3% the savings rate of households in the euro area, at 23.3% business investments

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At 17.3% the savings rate of households in the euro area, at 23.3% business investments

The savings rate of households in the euro area decreased to 17.3% in the third quarter of 2020, compared to 24.6% in the second quarter of 2020, according to data published by Eurostat, the statistical office of the European Union.

Despite this significant decrease, this is the second highest value since the beginning of the index time series in 1999 and 4.4 percentage points higher than in the same quarter of the previous year.

At the same time, the percentage of household investment in the euro area was 8.8% in the third quarter of 2020, recovering from 7.9% in the previous quarter.

According to Eurostat, in the third quarter of 2020, the share of business profits increased from 39.0% to 39.6% in the euro area.

In addition, the share of business investment in the euro area remained almost stable at 23.3%, compared to 23.2% in the second quarter of 2020.

According to Eurostat, the decrease in household savings by 7.3 percentage points is explained by the sharp recovery of their consumption (+ 13.9%), at a much higher rate than the recovery of gross disposable household income (+ 3 , 9%).

The quarterly increase of 0.9 percentage points in the investment rate of households is explained by the 15.1% increase in gross fixed capital formation, while the increase in gross disposable income was much more modest.

The increase in the share of business profit is explained by the recovery of the gross value added of companies (+ 14.5%), at a faster rate than the recovery of employee compensation (wages and social contributions) plus taxes minus production subsidies (+ 13 , 4%).

Finally, the slight increase in business interest rates is explained by the increase in gross fixed capital formation of companies (+ 14.9%), at a slightly faster rate than the recovery of gross value added of companies (+ 14.5%).

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Source: politis.com.cy

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