Portuguese save little compared to the European average

Short monthly income and small remunerations for financial products contribute to this trend. But the level of savings varies depending on the season. Economists consulted by the State defend measures that encourage this practice.

The savings rate of Portuguese families did not reach 10% in the second quarter of 2024, but even so, it has reached new highs since the fourth quarter of 2021, reveal the latest data from the National Statistics Institute (INE). It is true that it falls short of the average for euro zone countries, where the savings rate was 15.3% in the first quarter and 15.7% in the second quarter, according to Eurostat.

But the behavior of the Portuguese varies, as Deco points out, admitting that they generally save money in difficult times. "Already in this century, we emphasize that it was in difficult times, of crisis, that the Portuguese tightened their belts and increased their savings reserve. In 2002, the savings rate reached 13.9%, when the country suffered the first euro crisis. We also highlight the subprime financial crisis in 2009 (11.6%) and, more recently, the period of the covid-19 pandemic, when savings levels reached 13.8% at the end of 2020”, he highlights.

To i, João César das Neves states that despite these variations, the savings rate is very low: "It is true that it is rising and that before interest rates did not help, but it remains far below that of our European partners, who have the same fees.” The economist notes that we have the second lowest savings rate of the fifteen, right after Greece. "Recent improvements have changed the situation little.”

Paulo Monteiro Rosa, economist at Banco Carregosa, also considers that the level of savings is still low to guarantee the financial security of families in the long term. "The Portuguese savings level has been around 6% or 7% of available income, although in the first half of 2024 it rose to almost 10%, driven by higher interest rates, encouraging savings to the detriment of consumption . Also in 2020, restrictions on circulation affected consumption, contributing to increasing the level of savings that year to almost 15%. In Portugal, the propensity to save is low, especially when compared to the Euro Zone average of around 14%”, he tells our newspaper.

And remember that, historically, Portugal has a lower savings rate than other European countries, explained by economic and cultural factors, such as lower average incomes than other economies in the European Union, with the partial exception of Eastern countries, in addition to high taxes with housing and consumption, in addition to a financial culture that tends to value long-term savings less. "Although Portuguese families have been saving a little more recently, as evidenced by the increase in the level of savings in the first half of 2024, perhaps due to economic uncertainties and the increase in the cost of living, there is still a specific financial vulnerability in Portugal, a country with an economy below that of the most advanced economies in Europe, a lower GDP per capita, not allowing for higher salaries that provide higher savings rates”, he highlights.

Given this scenario, the economist draws attention to the fact that the existence of a more paternalistic State, guaranteeing pensions for Portuguese people in old age, with increased costs at fiscal level, is considered "normal.” Financial initiatives for financial education and incentives for savings would be important, in addition to possible reforms that could alleviate the burden on disposable income, allowing more Portuguese people to be able to save”. And he adds that "although our country may not have a strong culture of savings in bank deposits, liquidity or investments in the capital market (such as bonds and shares) to meet financial needs, it is one of the countries with the highest rate of homeownership, which it also constitutes a form of savings, despite the lower associated liquidity”.

More critical is Eugénio Rosa, who argues that the level of savings in Portugal is very low "due to the low income of the Portuguese population, real unemployment which is much higher than official unemployment, the high wage inequality between men and women, which continues in retirement, which determined that, in 2023, the average retirement age for women would correspond to only 57% of the average retirement age for men”.

Variations Eugénio Rosa remembers, however, that if we analyze the evolution of the savings rate in our country over the years, we see important variations, which reflect concerns and the situation of families over time. "In 2012, that is, when the troika entered Portugal, the savings rate was 9.8%, but when it left, in 2015, the savings rate had fallen to just 7.4%, which leads to the conclusion that the violent austerity policy imposed on the country by the PSD/CDS/troika Government has forced families to resort to their low savings to survive and face the difficulties created by this policy”.

The economist also recalls that, in 2019, the savings rate in Portugal was just 7%, but in 2020, with the pandemic, family spending and restrictions decreased significantly, and the savings rate in Portugal reached, for the first time , 12.1% (in the EU:18.2%; in the Eurozone: 19.3%). "From that year onwards, and as a consequence of the enormous increase in the interest rate on housing loans and inflation, the savings rate began to decrease rapidly, as families were once again forced to use their savings to or to amortize credits that they had obtained from banks whose interest rates reached unaffordable values ??or to face the spike in inflation”.

How to encourage João César das Neves believes that a lot can be done to encourage an increase in the savings rate and leaves a warning: "Better than one-off measures, we needed to start by resolving the various serious structural problems of our financial system”. And he adds: "The Portuguese economy is apathetic, with few opportunities, due to the bottlenecks that the State and society create over it. Therefore, the most reasonable thing to do is deposits and state debt, as the Portuguese are doing. If you want more income, put your savings out there, which is fortunately easier to do today.”

For Paulo Rosa, one of the main measures to encourage savings would be to focus on reducing the tax burden on disposable income, including mainly salaries, but also other income, such as capital, offset by an increase in taxes on consumption to avoid losses of tax revenue. "In this way, savings would be encouraged by making more income available to families, while consumption would be penalized. At the same time, it is essential to develop a more resilient and productive economy, with lower energy costs and the production of goods and services with high added value, enabling more income and, consequently, a greater propensity to save”.

Eugénio Rosa also gives a red card to incentives – which, in his view, are practically non-existent. "Banking term deposits mostly have negative rates, as the rates paid by banks are normally lower than inflation, which in many cases is added to management fees. And then there are the security issues. It is true that there is a guarantee fund that guarantees deposits of up to 100 thousand euros, however, if we analyze its report and accounts for 2023 we find that to guarantee 176,168 million bank deposits, the Guarantee Fund had only 1,725 ??million, which which corresponded to just 0.98% of the volume of deposits”.